High Return Mutual Funds
The Indian capital market contains numerous investments across various asset classes, allowing investors to diversify and make good returns. One of the most widely utilised investment instruments is Mutual Funds. Mutual funds are investment vehicles that pool money from multiple investors to invest in a portfolio of assets such as stocks, bonds, and other securities. However, it depends entirely on the chosen asset to determine the returns the investors will get. For example, if the mutual fund aims to provide steady returns, the fund manager may choose assets with steady returns and less risk. However, there are high-return mutual funds that aim to maximise the return potential for investors by investing in assets that have the highest growth potential.
What Are High Return Mutual Funds?
High-return mutual funds are mutual funds that aim to generate higher returns than the average mutual fund. Best high-return mutual funds invest in securities such as stocks, bonds, and other assets with high growth potential. High-return mutual funds have a higher degree of risk than the average mutual fund, as they invest in securities with a higher potential for growth but also a higher potential for volatility. When the fund managers look to allocate the pooled money to various investment instruments, they aim to analyse and identify assets with high growth potential, even if they come with a higher risk.
High-return mutual funds may be suitable for investors with a higher risk tolerance and who are comfortable with the potential volatility of investing in higher-risk securities. Investors seeking higher returns than those offered by the average mutual fund and willing to take on additional risk to achieve those returns may also consider investing in high-return mutual funds.
Top 10 high-return mutual funds in 2023
Investing in mutual funds can be rewarding if the investors base the investments on past patterns and market knowledge. Similar to equities, mutual funds follow a pattern based on market trends, making good long-term returns. One of the best ways to invest in making informed mutual fund investment decisions is to analyse high-return mutual funds in India. Here is a detailed table for the top 10 high returns mutual funds in India.
Name | Subcategory | AUM (Rs. in cr.) | CAGR 3Y (%) | 3Y Avg Annual Rolling Return (%) |
Nippon India Small Cap Fund Direct-Growth | Small Cap Fund | 23,910 | 35.7 | 49.8 |
ICICI Pru Commodities Fund | Thematic Fund | 844.11 | 57.07 | 62.28 |
PGIM India Midcap Opportunities Fund Direct-Growth | Mid Cap Fund | 7,708 | 42.90 | 45.74% |
Quant Flexi Cap Fund | Flexi Cap Fund | 1,044.80 | 47.64 | 41.60 |
Bandhan Emerging Businesses Fund | Small Cap Fund | 1,422.53 | 34.14 | 41.65 |
Quant Small Cap Fund | Small Cap Fund | 3,134.10 | 66.55 | 61.79 |
Tata Small Cap Fund Direct-Growth | Small Cap Fund | 3,301 | 50.43 | 47.4% |
Parag Parikh Flexi-Cap Fund Direct-Growth | Flexi-Cap Fund | 13,186.70 | 33.71% | 33.75% |
ICICI Pru Technology Fund | Sectoral Fund- Technology | 8,993.09 | 43.78 | 44.03 |
Bank of India Small Cap Fund | Small Cap Fund | 411.72 | 42.58 | 43.93 |
Detailed Overview of the best high-return mutual funds
Here is a detailed overview of the above high-return mutual funds:
1. Nippon India Small Cap Fund Direct-Growth: The Nippon India Small Cap Fund Direct-Growth is a high-return mutual fund which was launched as Small Cap Mutual Fund. The fund has been running operations for more than 10 years and has Rs 23,910 crores worth of assets under management, making it medium-sized for its category. The Nippon India Small Cap Fund Direct-Growth has an expense ratio of 0.86% which is higher than a majority of small-cap funds in the same category. The fund has a 3-year CAGR of 35.7% and has given 3-year average annual rolling returns of 49.8%.
2. ICICI Pru Commodities Fund: ICICI Pru Commodities Fund is one of the high-return mutual funds in India in 2023 and belongs to the thematic fund category. The fund has 844.11 crores worth of assets under management with a PE Ratio of 23.34. The ICICI Pru Commodities Fund has an expense ratio of 1.03%, allowing it to generate better returns than funds in the same category. The fund has a 3-year CAGR of 57.07% and has given 3-year average annual rolling returns of 62.28%. The minimum lump sum amount an investor can invest in the mutual fund is Rs 5,000.
3. PGIM India Midcap Opportunities Fund Direct-Growth: PGIM India Midcap Opportunities Fund Direct-Growth is a mid-cap opportunities fund that has total assets under management of Rs 7,708 as of December 2022. The fund has been running operations for more than 9 years and has Rs 5,000 as the minimum lump sum amount. The PGIM India Midcap Opportunities Fund Direct-Growth has an expense ratio of 0.46% which is lower than a majority of mid-cap funds in the same category. The fund has a 3-year CAGR of 42.90% and has given 3-year average annual rolling returns of 45.74%.
4. Quant Flexi Cap Fund: Quant Flexi Cap Fund is one of the high-return mutual funds that runs operations in the flexi-cap mutual fund category. The mutual fund has a current NAV of Rs 62.72% with Rs 1,044 crores worth of total assets under management. The Quant Flexi Cap Fund has an expense ratio of 0.58% which is slightly lower than other mutual funds of the same category. Its PE ratio is 31.35, with -0.14 as the Sharpe ratio. The fund has a 3-year CAGR of 47.64% and has given 3-year average annual rolling returns of 41.60%.
5. Bandhan Emerging Businesses Fund: Bandhan Emerging Businesses Fund has a current NAV of Rs 21.13% with Rs 1,422.53 crores worth of total assets under management. The Bandhan Emerging Businesses Fund has an expense ratio of 0.70% which is slightly higher than other mutual funds of the same category. Its PE ratio is 35.48, with -0.45 as the Sharpe ratio. The fund has a 3-year CAGR of 34.14% and has given 3-year average annual rolling returns of 41.65%. The benchmark for the mutual fund is S&P BSE 250 Small Cap - TRI, and the minimum lump sum investment amount is Rs 1,000.
6. Quant Small Cap Fund: Quant Small Cap Fund is a small cap fund with a NAV of Rs 157.78 and Rs 3,134.10 crores worth of assets under management. The Quant Small Cap Fund is one of the top ten high-return mutual funds with an expense ratio of 0.62, which is higher than other funds in this category. It has a PE ratio of 26.91 and a Sharpe ratio of 0.13. The fund has a 3-year CAGR of 66.55% and has given 3-year average annual rolling returns of 61.79%.
7. Tata Small Cap Fund Direct-Growth: Tata Small Cap Fund Direct-Growth is a small-cap direct equity fund high return mutual fund that has a current NAV of Rs 25.3 with Rs 3,301 crores worth of total assets under management. Some of the top holding firms in the company are IDFC Ltd, Radico Khaitan Ltd, Redington Ltd and DCB Bank Ltd. The fund has the highest investment in the industrial sector at 33.8%. The fund has a 3-year CAGR of 50.43% and has given 3-year average annual rolling returns of 47.4%%.
8. Parag Parikh Flexi-Cap Fund Direct-Growth: Parag Parikh Flexi-Cap Fund Direct-Growth is a flexi-cap fund and has a current NAV of Rs 52.37 with Rs 13,186.70 worth of total assets under management. The fund has a PE ratio of 29.75 and an expense ratio of 0.98%, which is higher than the funds in its category. The fund has a 3-year CAGR of 33.71%% and has given 3-year average annual rolling returns of 33.75%. The benchmark for the mutual fund is S&P BSE TECk Index - TRI, and the minimum lump sum investment amount is Rs 5,000.
9. ICICI Pru Technology Fund: ICICI Pru Technology Fund is a sectoral fund that majorly invests in technology companies. The fund has an expense ratio of 0.98%, which is higher than the funds of the same category. Its current NAV is 141.15, and the fund follows S&P BSE TECk Index - TRI as its benchmark index. It has Rs 8,993.09 crores worth of total assets under management. The fund has a 3-year CAGR of 43.78% and has given 3-year average annual rolling returns of 44.03%. The minimum lump sum investment amount in the fund is Rs 5,000.
10. Bank of India Small Cap Fund: Bank of India Small Cap Fund is a high-return mutual fund that belongs to the small-cap category. It has a NAV of Rs 30.11 with Rs 411.72 crores worth of assets under management. With a PE ratio of 42.67 and an expense ratio of 1.52%, the fund has generated better returns than other funds in the same category. The fund follows Nifty Smallcap 250 - TRI as its benchmark index and has Rs 5,000 as the minimum lump sum investment amount. The fund has a 3-year CAGR of 42.58% and has given 3-year average annual rolling returns of 43.93%.
Features Of High Return Mutual Funds
Here are some of the key features of high-return mutual funds:
1. Higher returns: These funds typically invest in stocks or other securities with high growth potential, which can result in higher returns.
2. Higher risk: High-return mutual funds majorly invest in riskier securities than the average mutual fund, which can result in greater volatility in returns.
3. Active management: High-return mutual funds are actively managed, as a professional fund manager makes investment decisions on behalf of investors.
4. Expense ratios: High-return mutual funds tend to have higher expense ratios than the average mutual fund due to the costs associated with active management and higher-risk investments.
Conclusion
Mutual funds investments have the potential to provide high returns to investors based on the asset allocation and the chosen assets. Depending on investors’ risk appetite and investment goals, they can invest in high-return mutual funds to realise the higher risk with the potential of high returns. However, it is always wise to seek the advice of a financial advisor before making any investment decisions, especially when considering high-return mutual funds. A financial advisor can help assess whether a high-return mutual fund is suitable for your investment objectives and risk tolerance and can recommend other investment options if necessary.
