Mutual fund investors typically seek schemes that have exceeded their respective benchmarks over a period of time. Despite deploying a significant amount of funds over the past five weeks, equity mutual fund (MF) schemes continue to hold a substantial amount of cash amidst a 10% downturn in the National Stock Exchange Nifty benchmark.
According to a report by Motilal Oswal Financial Services last month, as of the end of October, equity schemes from the top 20 fund houses held 5.5% of their portfolios in cash, slightly lower than the 6% seen in September.
In 2024, 70% of equity mutual funds have exceeded their respective benchmarks. Further analysis reveals that nine equity mutual funds have provided returns of more than four times the initial investment over the past five years. These funds belong to the mid-cap and smallcap categories out of the total 193 equity mutual funds that have been active in the market for the same duration. Among these, seven small cap and two mid cap funds have delivered returns of over four times the initial investment of Rs 1 lakh in the last five years.
Here are the top 9 equity funds that gave 4 times returns
Nine funds included in the mid-cap and small-cap categories showed impressive growth over the past five years. Out of these, seven small-cap funds and two mid-cap funds saw their investors’ initial Rs 1 lakh investment grow by more than four times.
The top performers on the list were all small-cap funds, with Quant Small Cap Fund leading the pack by multiplying lumpsum investments by an impressive 6.71 times, resulting in a CAGR of 46.29%. A Rs 1 lakh investment in this fund five years ago would now be worth Rs 6.70 lakh.
The Quant Small Cap Fund Direct Plan-Growth has amassed assets under management (AUM) totaling Rs 26,331 Crores as of 30/09/2024. Since its inception, the fund has boasted an annual average return of 19.89%. The Asset Management Company (AMC) asserts that the fund has a track record of doubling invested capital every two years.
In terms of consistency in delivering returns, the Quant Small Cap Fund Direct Plan-Growth scheme outperforms most funds in its category. However, its ability to mitigate losses in a declining market falls below the industry average.
The top 5 holdings of the fund are Reliance Industries Ltd., JIO Financial Services Ltd., Aegis Logistics Ltd., Aditya Birla Fashion and Retail Ltd., and Bikaji Foods International Ltd.
Bank of India Small Cap Fund and Nippon India Small Cap Fund also showed significant growth, multiplying investors’ initial investments by 4.90 times and 4.67 times respectively over the same time period. These results demonstrate the potential for substantial returns in the small cap funds category.
Since its launch, the Bank of India Small Cap Fund Direct-Growth scheme has consistently delivered an average annual return of 33.71%. The fund has a track record of doubling the invested capital every 2 years.
This fund’s ability to generate consistent returns aligns with other funds in its category. It also excels in minimizing losses during market downturns. The top 5 holdings of the fund include Ami Organics Ltd., Vijaya Diagnostic Centre Ltd., Radico Khaitan Ltd., Kaynes Technology India Ltd., and PCBL Ltd.
Since its inception, the Nippon India Small Cap Fund Direct-Growth scheme has achieved an average annual return of 27.59%. This translates to a doubling of the invested capital every 2 years. The fund’s consistent performance aligns with the industry standards for funds in its category, particularly in its ability to minimise losses during market downturns.
The majority of the fund’s portfolio is allocated to sectors such as Capital Goods, Financial Services, Consumer Staples, and Healthcare. Notably, the fund has taken a relatively lower exposure to Capital Goods and Financial sectors compared to its peers.
The fund’s top 5 holdings include HDFC Bank Ltd., Multi Commodity Exchange Of India Ltd., Kirloskar Brothers Ltd., Apar Industries Ltd., and Tube Investments Of India Ltd. These holdings reflect the fund’s strategic investment approach and diversification strategy.
Canara Robeco Small Cap Fund and Edelweiss Small Cap Fund both increased the value of lumpsum investments by 4.35 times and 4.19 times respectively over the specified period.
Since its launch, the Canara Robeco Small Cap Fund Direct – Growth scheme has delivered an average annual return of 29.92%. The fund has consistently doubled the money invested in it every 3 years. Its performance in delivering returns is in line with similar funds in its category, although its ability to control losses in a falling market is considered average.
The fund’s top 5 holdings include Multi Commodity Exchange Of India Ltd., Kaynes Technology India Ltd., Kei Industries Ltd., Aditya Birla Real Estate Ltd., and Bharat Electronics Ltd.
Motilal Oswal Midcap Fund, on the other hand, grew a Rs 1 lakh lumpsum investment by 4.15 times in the last five years, resulting in a current value of Rs 4.15 lakh with a Compound Annual Growth Rate (CAGR) of 32.93%.
The Motilal Oswal Midcap Fund Direct-Growth scheme has consistently delivered impressive average annual returns of 26.65% since its launch. It has a track record of doubling the invested money every 2 years, outperforming many funds in its category. The fund has demonstrated a strong ability to manage losses in a declining market. Notable holdings of the fund include Polycab India Ltd., Coforge Ltd., Kalyan Jewellers India Ltd., Zomato Ltd., and Persistent Systems Ltd.
Similarly, Tata Small Cap Fund saw a growth of 4.06 times in investors’ lumpsum investments over the last five years. If an investor had put Rs 1 lakh into this scheme five years ago, the current value would have been Rs 4.05 lakh with a CAGR of 32.31%.
Since its inception, Tata Small Cap Fund Direct – Growth scheme has delivered an impressive average annual return of 29.66%. The fund has a track record of doubling the investment every 3 years, showcasing its consistent performance in comparison to its peers in the same category.
One of the key strengths of this fund is its ability to effectively manage losses during periods of market downturns, setting it apart from other funds. The top 5 holdings of the fund include BASF India Ltd., Kirloskar Pneumatic Company Ltd., Quess Corp Ltd., IDFC First Bank Ltd., and Godrej Industries Ltd. These holdings reflect the fund’s strategy of investing in strong companies within various sectors to optimise returns for investors.
The Quant Mid Cap Fund and Invesco India Smallcap Fund both saw a 4.03x increase in lump sum investments. Investing Rs 1 lakh in these funds would have resulted in a return of Rs 4.03 lakh in the Quant Mid Cap Fund and Rs 4.02 lakh in the Invesco India Smallcap Fund, respectively.
The Quant Mid Cap Fund Direct-Growth scheme has delivered an average annual return of 19.40% since its launch, doubling the money invested in it every 3 years. Its consistent returns align with other funds in its category, although its ability to control losses in a declining market is considered average.
Its top investments include Reliance Industries Ltd., Aurobindo Pharma Ltd., Container Corporation Of India Ltd., IRB Infrastructure Developers Ltd., and Tata Communications Ltd.
Since its inception, the Invesco India Smallcap Fund Direct – Growth scheme has produced an average annual return of 29.29%. Investors have seen their initial investment double every 2 years. This performance is in-line with other funds in its category, demonstrating consistent returns over time. The fund shows average ability to mitigate losses in a declining market.
Its top investments of the fund include Aditya Birla Real Estate Ltd., Kalyan Jewellers India Ltd., IIFL Wealth Management Ltd., Multi Commodity Exchange Of India Ltd., and Jyoti CNC Automation Ltd.