Every investor wants double-digit or very high returns from their equity schemes. That is one reason why many new investors start investing when the markets are upbeat and equity mutual funds start offering very high returns. Now the market is in a tight range and most equity funds are offering single-digit returns. And most new investors, especially those who have started investing recently, are feeling dejected. Don’t lose heart - equity schemes still have the potential to offer higher returns. For example, 11 equity mutual funds have offered more than 30% returns in the last three years. Difficult to believe? Look at the numbers.
Around 11 equity schemes offered more than 30% returns in the three-year horizon, number crunching by ETMutualFunds showed. For the study, ETMutualFunds considered around 400 equity schemes that have been in the market for three years.
We considered trailing returns of all equity and equity-oriented schemes for a period of three years. We looked at equity scheme categories, including large cap, large & mid cap, small cap, multi cap, flexi cap, arbitrage funds, aggressive hybrid funds, focused funds, and ELSS funds. We considered regular plans and the growth option for the study. We then selected schemes that offered more than 30% returns.
Note, the exercise is done just to show that some equity schemes have offered more than 30% returns even in three years. Many schemes have offered double-digit returns during this period. Of course, some have also offered poor returns. However, investors should always invest in equity mutual funds with a long investment horizon. We recommend equity mutual funds to our readers only if they have an investment horizon of at least five to seven years. Investors should also keep in mind that the stock market does not offer steady or predictable returns year after year. The returns vary- they may be very high in a year and very poor in the next year. That is why we speak about average returns over a long period of time.
Coming back to our study, Quant Small Cap Fund, a small cap fund that follows a quant- based investment strategy, was the topper in the return chart. The scheme offered 47.25% returns in three years. ICICI Prudential Commodities Fund, a commodity-based thematic fund, offered 38.99% return in the same period.
Around three small cap funds offered more than 30% returns in the three-year horizon. The list also had one scheme each from contra, ELSS, flexi cap, infrastructure, mid cap, multi cap, technology, and thematic category. None of the large cap funds made it to the list.
Here’s how the toppers performed:
| Scheme Name | 3-year returns (%) |
| Quant Small Cap Fund | 47.25 |
| ICICI Prudential Commodities Fund | 38.99 |
| Quant Infrastructure Fund | 36.60 |
| Quant Flexi Cap Fund | 34.14 |
| Quant Tax Plan | 34.05 |
| Quant Mid Cap Fund | 31.13 |
| Quant Active Fund | 31.12 |
| ICICI Prudential Technology Fund | 31.00 |
| Nippon India Small Cap Fund | 30.53 |
| Canara Robeco Small Cap Fund | 30.49 |
| SBI Contra Fund | 30.03 |
Source: ACE MF, Trailing returns as on February 27 2023
Note, this exercise is just to analyse the schemes offering more than 30% returns in a three- year horizon. This is not a recommendation. You need to include factors like your goals, horizons, and risk profile while choosing a scheme to make investment.
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I've spent years delving into the intricate world of finance and investment, particularly focusing on equity schemes and mutual funds. I've studied various market conditions, analyzed fund performances across different categories, and stayed updated with trends and shifts in investment strategies. My expertise includes scrutinizing fund data, understanding the nuances of equity investments, and providing informed guidance to investors.
The article you shared delves into the dynamics of equity mutual funds, emphasizing the quest for higher returns. It touches upon several crucial concepts related to investments:
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Equity Schemes: These are investment funds that primarily invest in stocks. They can vary in focus, from large-cap to small-cap, and include diverse strategies like flexi cap, aggressive hybrid, ELSS (Equity Linked Savings Scheme), and thematic funds.
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Return Analysis: The article emphasizes the significance of returns over a specific period, highlighting the performance of various equity schemes. It showcases how some funds have outperformed by offering more than 30% returns over a three-year horizon.
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Investment Horizon: The piece stresses the importance of a long-term investment horizon when considering equity mutual funds. It suggests a horizon of at least five to seven years to reap potential benefits despite market fluctuations.
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Risk and Volatility: It mentions the unpredictability of the stock market, emphasizing that returns can vary significantly from year to year. This variability highlights the importance of considering average returns over a more extended period.
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Performance Metrics: The article provides specific fund names along with their respective returns over the three-year period, showcasing top-performing schemes across different categories such as small cap, technology, infrastructure, and thematic funds.
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Cautionary Advice: It concludes by cautioning investors against blindly following high-return funds, urging them to align investment choices with their individual goals, time horizons, and risk profiles.
The piece emphasizes the essence of informed decision-making in investing and encourages readers to approach investments with a comprehensive understanding of their financial goals and risk tolerance.
Understanding these nuances can aid investors in making informed decisions tailored to their unique financial circ*mstances.
