Last Updated on Feb 12, 2024 by Anjali Chourasiya
Wealth creation involves investment in long-term instruments. As an investor, you wish to invest in instruments that are profitable for you. For this purpose, a high-return mutual fund is a good choice. They are a type of equity fund, carrying high risk and delivering high returns. Let’s explore them in detail and list the top high-return mutual funds based on their 3-yr CAGR.
Table of Contents
What are high-return mutual funds?
High-return mutual funds carry high risks. They typically invest in equity which is known for its specific risk-reward dynamic. These mutual funds can provide you with high returns. However, their risk-to-return ratio is also significantly higher. That said, while you may make profits, you may just as quickly lose your investment amount.
These funds are volatile and unpredictable. High-return funds are suitable for investors with an aggressive risk appetite.
Top 10 high-return large-cap mutual funds in 2023
| Name | AUM (Rs. in cr.) | CAGR 3Y (%) | Expense Ratio (%) | SIP Investment |
| Nippon India Large Cap Fund | 20,217.64 | 22.95 | 0.82 | Allowed |
| ICICI Pru Bluechip Fund | 49,837.78 | 19.57 | 0.93 | Allowed |
| JM Large Cap Fund | 80.77 | 19.53 | 1.75 | Allowed |
| HDFC Top 100 Fund | 30,261.72 | 19.46 | 1.08 | Allowed |
| Invesco India Largecap Fund | 909.48 | 18.35 | 0.80 | Allowed |
| Baroda BNP Paribas Large Cap Fund | 1,743.14 | 17.14 | 0.92 | Allowed |
| Edelweiss Large Cap Fund | 685.68 | 16.85 | 0.77 | Allowed |
| Tata Large Cap Fund | 1,854.67 | 16.63 | 1.15 | Allowed |
| Sundaram Large Cap Fund | 3,338.43 | 16.11 | 0.60 | Allowed |
| Kotak Bluechip Fund | 7,446.82 | 16.07 | 0.59 | Allowed |
Note: The list of top 10 high-return large-cap mutual funds is curated using Tickertape Mutual Fund Screener on the date 9th February 2024 by using the following parameters –
- Category: Equity > Large cap fund
- Plan: Growth
- 3-yr CAGR: Sorted from highest to lowest
Top 10 high-return mid-cap mutual funds in 2023
| Name | AUM (Rs. in cr.) | CAGR 3Y (%) | Expense Ratio (%) | SIP Investment |
| Quant Mid Cap Fund | 4,222.43 | 40.17 | 0.76 | Allowed |
| Motilal Oswal Midcap Fund | 7,410.69 | 34.53 | 0.65 | Allowed |
| Mahindra Manulife Mid Cap Fund | 1,902.65 | 31.67 | 0.51 | Allowed |
| HDFC Mid-Cap Opportunities Fund | 56,032.99 | 31.28 | 0.80 | Allowed |
| Nippon India Growth Fund | 24,365.53 | 30.09 | 0.86 | Allowed |
| Edelweiss Mid Cap Fund | 4,915.47 | 27.99 | 0.43 | Allowed |
| Baroda BNP Paribas Mid Cap Fund | 1,745.54 | 26.08 | 0.61 | Allowed |
| Union Midcap Fund | 976.86 | 25.88 | 0.71 | Allowed |
| SBI Magnum Midcap Fund | 15,457.95 | 25.86 | 0.84 | Allowed |
| ICICI Pru Midcap Fund | 5,115.48 | 25.57 | 1.06 | Allowed |
Note: The list of top 10 high-return mid-cap mutual funds is curated using Tickertape Mutual Fund Screener on the date 9th February 2024 by using the following parameters –
- Category: Equity > Mid cap fund
- Plan: Growth
- 3-yr CAGR: Sorted from highest to lowest
Top 10 high-return small-cap mutual funds in 2023
| Name | AUM (Rs. in cr.) | CAGR 3Y (%) | Expense Ratio (%) | SIP Investment |
| Quant Small Cap Fund | 15,663.84 | 48.12 | 0.77 | Allowed |
| Nippon India Small Cap Fund | 43,815.61 | 39.04 | 0.73 | Allowed |
| HSBC Small Cap Fund | 13,230.82 | 37.95 | 0.69 | Allowed |
| Tata Small Cap Fund | 5,819.07 | 35.73 | 0.32 | Allowed |
| Canara Rob Small Cap Fund | 9,174.79 | 34.81 | 0.46 | Allowed |
| HDFC Small Cap Fund | 28,606.62 | 34.47 | 0.72 | Allowed |
| Bank of India Small Cap Fund | 910.93 | 33.62 | 0.88 | Allowed |
| Franklin India Smaller Cos Fund | 11,397.83 | 33.53 | 0.90 | Allowed |
| Bandhan Small Cap Fund | 4,289.96 | 33.01 | 0.30 | Allowed |
| Edelweiss Small Cap Fund | 3,156.79 | 32.73 | 0.40 | Allowed |
Note: The list of top 10 high-return small-cap mutual funds is curated using Tickertape Mutual Fund Screener on the date 9th February 2024 by using the following parameters –
- Category: Equity > Small cap fund
- Plan: Growth
- 3-yr CAGR: Sorted from highest to lowest
Features of high-return mutual funds
Various types: There are ten sub-categories of equity mutual funds as classified by the Securities Exchange Board of India (SEBI). It includes large, mid, and small-cap funds, ELSS funds, focused funds, dividend-yielding funds, thematic and sector funds, etc. Hence, there is a wide variety for you to choose from.
Risk-reward ratio: The phrase ‘higher the risk, higher the reward’ was perhaps coined for high-return mutual funds. Its risk-to-return ratio is proportional.
Asset allocation: Equity funds allocate 65% to 80% of assets in equities. Therefore, they are known as ‘high-risk funds’. In a bullish trend, this high asset allocation can be proved to be incredibly profitable while the chances of losses increases in the bearish market.
Tax benefits: High-return mutual funds can give you tax benefits. For instance, with ELSS funds, there is an option to claim deductions of up to Rs. 1,50,000 under Section 80C. However, you have to pay short-term and long-term capital gains on your returns.
Investment modes: You can invest in high-return mutual funds in two ways: Systematic Investment Plan (SIP) and lumpsum. The minimum SIP investment goes as low as Rs. 150.
Factors to consider before investing in high return mutual funds
- Investment objective: Before diving into any mutual fund, assess if its objectives align with your financial goals. Are you saving for retirement, a child’s education, or building an emergency fund? The fund’s strategy should match your timeline and risk tolerance.
- Risk tolerance: High return often comes with high risk. Evaluate your risk appetite. Can you tolerate the volatility that comes with the potential for higher returns, or would a safer investment make you sleep better at night? It is crucial to decide this before your step into any investment.
- Performance history: While past performance isn’t a guarantee of future results, it can provide insights into how the fund has managed under various market conditions. Look for consistent performance over a longer period, rather than short-term gains.
- Expense ratio and fees: High fees can eat into your returns. Understand the fund’s expense ratio and any additional fees associated with buying, holding, or selling the fund. Lower costs mean more of your money stays invested.
- Fund manager’s expertise and track record: The fund manager’s decisions play a crucial role in the fund’s performance. Research their experience, investment philosophy, and performance history with other funds.
- Asset allocation and diversification: Investigate the fund’s holdings to ensure it’s well-diversified across sectors, geographies, and asset classes. Diversification can help mitigate risk.
- Market conditions: Economic and market conditions can impact fund performance. Consider the current market cycle and how it aligns with the fund’s investment strategy.
Risks associated with high return mutual funds
- Market Risk: The value of investments can go down as well as up due to market fluctuations. High return funds often invest in volatile segments, exposing you to greater market risk.
- Credit Risk: This applies to debt mutual funds. If the issuer of the bond fails to pay interest or repay the principal, it can lead to losses for the fund.
- Interest Rate Risk: For debt funds, changes in interest rates can affect the value of the fund’s holdings. Generally, when interest rates rise, bond prices fall, and vice versa.
- Liquidity Risk: Some funds may invest in less liquid assets, making it difficult to sell these investments without impacting their price significantly.
- Concentration Risk: If the fund is heavily invested in a particular sector or company, it’s more vulnerable to downturns in that area.
- Managerial Risk: Poor decisions by the fund manager can lead to underperformance, affecting your investment’s return.
- Operational Risks: Issues like errors in record-keeping, fraud, or other administrative problems can also impact a fund’s performance.
Understanding these risks will empower you to make more informed decisions when considering high-return mutual funds as part of your investment portfolio. Investing isn’t just about chasing the highest returns; it’s about balancing potential rewards with your comfort level around risk.
To conclude
High-return mutual funds are mostly equity mutual funds with high risk. However, it is always worthwhile to consult a financial advisor before investing. You can use Tickertape Mutual Fund Screener to sort the top mutual funds based on your preference. With over 50+ filters, you can get the best mutual funds based on your preferences. You can keep track of all the mutual funds you have invested in using our new Mutual Funds Portfolio, which helps you track the performance of your portfolio effortlessly. Explore the new Portfolio now!
FAQs about high return mutual funds
1. What are the top 10 mutual funds for SIP to invest?
– Nippon India Large Cap Fund
– ICICI Pru Bluechip Fund
– JM Large Cap Fund
– HDFC Top 100 Fund
I– nvesco India Largecap Fund
– Baroda BNP Paribas Large Cap Fund
– Edelweiss Large Cap Fund
– Tata Large Cap Fund
– Sundaram Large Cap Fund
– Kotak Bluechip Fund
This list is based on 9th February 2024. Note that these are equity mutual funds which allow SIP and have a high CAGR. The list is sorted using the Tickertape Mutual Fund Screener.
2. What is the significance of the highest CAGR in mutual funds, and how does it impact investment decisions?
3. How do I choose among the top 10 high return mutual funds in India?
4. What are the risks associated with investing in mutual funds that offer the highest CAGR?
5. Which mutual funds give 30% return?
– ICICI Pru Overnight Fund
– Quant Small Cap Fund
– Quant Infrastructure Fund
– Aditya Birla SL PSU Equity Fund
– SBI PSU Fund
– Bank of India Credit Risk Fund
– Quant Mid Cap Fund
– Invesco India PSU Equity Fund
– ICICI Pru Infrastructure Fund
– Nippon India Small Cap Fund
Note that these funds are sorted using Tickertape Mutual Fund Screener on 9th February 2024.
As an insatiable reader and learner, I’ve spent the last two years exploring the world of finance. With my creative mind and curious spirit, I love making complex finance topics easy and fun for everyone to understand. Join me on my journey as we navigate the world of finance together!
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