Top performing equity mutual fund schemes in India keep changing over time, since mutual funds are subject to market risks and historical performance of a scheme may not be sustained in the future. Further, different mutual fund schemes have different risk return characteristics.
For example, one cannot compare the performance of large cap equity mutual funds and midcap equity mutual funds. Similarly, one cannot compare the performance of diversified equity mutual funds and balanced mutual funds. Once an investor has identified a particular category of mutual funds for investment, based on his or her investment objectives, investment tenure and risk capacity, he or she needs to look at a number of factors when identifying the best mutual funds in that category.
The investor needs to look at mutual fund returns across various time scales by going to our MF research section http://meetplutus.com/mutual-funds-research/top-performing-mutual-funds. You should first select the relevant category and then look at the top performing mutual funds across several time periods, by selecting different periods like 1 year, 2 years, 3 years, 5 years etc. from the drop down menu.
For example, the best performing diversified equity funds in the last 5 years are Franklin India High Growth Companies Fund, Aditya Birla Sun Life Advantage Fund, Invesco India Contra Fund etc.
The best performing small and midcap funds in the last 5 years are SBI Small and Midcap Fund, Reliance Small Cap Fund, DSP BlackRock Microcap Fund etc.
The best performing Balanced Funds in the last 3 years are Principal Balanced Fund, Reliance Regular Savings Fund – Balanced Option, L&T India Prudence Fund etc.
For equity funds or equity oriented hybrid funds (balanced funds) one should always select a sufficiently long time-scale e.g. 3 to 5 years to evaluate performance, because short term performance may be biased by market conditions relative to investment strategy and may be not reflective of long term performance. However, one should also not look at performance over a very long period because fundamental attributes of a fund like fund manager, investment strategy, market cap strategy etc. may change. Apart from ranking within a particular category, you should also see how a mutual fund performed versus the benchmark.