Top 10 equity mutual funds for investment (2024)

The Indian equity market remains bullish. The benchmark equity index BSE Sensex closed hit a fresh new high of 67,467 on Wednesday. With this, the benchmark is up 10.9 percent since the start of the 2023 calendar year and the index has rallied 11 percent in the last 12 months. This is not a very high return from an asset with a big downside risk but is better than the yield on 1-year bank fixed deposit or a treasury bond of a similar tenure.

The stock prices in India have also kept pace with the rise in inflation and the general cost of living and thus protected the purchasing power of savers and investors.

The rally in the broader market has been even better and most mid and small-cap stocks have done far better than the Sensex. For example, the BSE Mid-cap index is up 27 percent year to date (YTD) in the current calendar year while the BSE Small cap index is up 28.9 percent YTD. This has been positive for equity mutual funds as the majority of the fund managers in India now largely invest in mid and small-cap stocks.

This is reflected in the 12-month performance of diversified equity mutual funds. According to data from ICRA Analytics, 324 out of 367 or 88 percent of all diversified open-ended equity mutual funds outperformed the BSE Sensex in the last 12 months. These funds delivered 18 percent returns on average in the last one year. These out-performing funds together had assets under management (AUM) of Rs 15.95 lakh crore, accounting for 86.3 percent of the combined AUM of all diversified equity funds pegged at Rs 18.48 lakh crore currently.

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The last 12 months however also saw big underperformance from past winners such as Axis Focussed 25 Fund (AUM of Rs 14,700 crore) which has delivered just 0.42 percent returns in the last 12 months. Other big underperformers include Axis Long Term Equity Fund (AUM of Rs 31,411 crore), UTI Flexi Cap Fund (AUM of Rs 25,611 crore) and Axis Bluechip Fund (AUM of Rs 32,153 crore).

Given this, it’s time for mutual fund investors to churn their portfolios and move their money to outperforming funds and away from laggards.

Here are 10 equity mutual funds that have outperformed the broader market by a big margin despite having a fairly large AUM that signals the durability of their performance. For our analysis, we have only selected funds with a current AUM of Rs 1000 crore or above.

1. The first is Nippon India Power & Infra Fund which has topped the league table with 35.2 percent returns in the last 12 months and an eye-popping 30 percent absolute return in the last six months. With an AUM of Rs 2545 crore, it is a multi-cap fund with big exposure to large-cap stocks such as Larsen & Toubro (L&T), National Thermal Power Corporation (NTPC), Reliance Industries, Bosch and Ultratech Cement.

2. Quant Small Cap Fund is on the second spot in our list with 32.8 percent and 26.65 percent returns in the last 12 months and 6 months respectively. The fund with an AUM of Rs 8077 crore has invested in select large cap stocks such as Reliance Industries and HDFC Banks besides small cap stocks in NBFC, FMCG and capital goods and metals & mining.

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3. ICICI Prudential Infrastructure Fund is next on our list with 32.7 percent and 21.95 percent returns in the last one year and six months respectively. The fund with an AUM of Rs 2896 crore is a multi-cap fund but with a big exposure to large-cap stocks such as NTPC, L&T, ICICI Bank, Bharti Airtel and Oil & Natural Gas Corporation (ONGC).

4. HDFC Small Cap Fund is the next one with 32.2 percent and 27.65 percent returns in the last one year and six months respectively. The fund with an AUM of Rs 22560 crore has invested in Sonata Software, Bank of Baroda, First Source Solutions, Bajaj Electricals and IDFC Ltd.

5. Next is Aditya Birla Sun Life PSU Equity Fund which has delivered 32.1 percent and 24.8 percent returns in the last 12 and six months respectively. A thematic fund with an AUM of Rs 1245 crore, it mostly invests in large-cap government-owned firms across sectors. Some of its key investments include NTPC, State Bank of India, Coal India, Power Grid Corporation and Punjab National Bank.

6. Franklin India Smaller Companies Fund is at the sixth spot with 31.4 percent and 29.23 percent returns in the last one-year and 6-months respectively. The fund with an AUM of Rs 9595 crore currently has invested in major mid and small-cap stocks such as Equitas Small Finance Bank, Brigade Enterprises, Deepak Nitrite, Kalyan Jewellers and Jyothy Labs.

7. DSP India Tiger Fund is next on our list with 30.2 percent and 28.95 percent returns in the last 12 and 6 months respectively. The fund with an AUM of Rs 2471 crore is a multi-cap fund with a tilt towards small-cap stocks. Some of its key investments include L&T, Apar Industries, NTPC, Siemens India and Reliance Industries.

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8. Nippon India Small Cap Fund is the eighth-ranked fund in our list with 30.1 percent and 31.55 percent returns in the last 12 and 6 months respectively. The fund with an AUM of Rs 36,539 crore has invested in stocks such as Tube Investments of India, HDFC Bank, Apar Industries, KPIT Technologies and CreditAccess Gramin Ltd.

9. HSBC Infrastructure Fund comes next with 29.4 percent and 29.08 percent returns in the last one year and six months respectively. The fund with an AUM of Rs 1856 crore is a multi-cap fund with large exposure to stocks such as L&T, NTPC, Bharti Airtel, Finolex Cables and Ultratech Cement.

10. The tenth and last stock on our list is SBI Healthcare Opportunities Fund which has delivered 28.9 percent and 30.47 percent returns in the last one year and six months respectively. A thematic fund with an AUM of Rs 2033 crore is multi-cap in its investment style. Some of its major investments include Sun Pharmaceuticals, Cipla, Divi Laboratories, Aether Industries and Max Healthcare Institute.

Happy Investing!

(Karan Deo Sharma is a Mumbai-based finance and equity markets specialist).

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