Top Performing Equity Mutual Funds in India 2024: Best Funds for High Returns
Active investors seeking growth and willing to take on moderate to high risks often choose equity-oriented mutual funds to outpace inflation. To select the best mutual funds, align the fund’s objectives with your investment goals. Evaluate key factors like NAV, returns, asset allocation, historical performance, risk, and exit load. Making well-informed decisions ensures more successful long-term investments.
This blog will go over some of these aspects of equity mutual funds while listing out an educational list of the top equity mutual funds in India for 2024!
List of Best Equity Mutual Funds in India 2024
Here is the informative list of the best equity mutual funds listed in the Indian stock market:
| Name | Sub Category | AUM (Rs. in cr.) | Expense Ratio (%) | CAGR 3Y (%) | CAGR 5Y (%) |
|---|---|---|---|---|---|
| Quant Small Cap Fund | Small Cap Fund | 24,529.77 | 0.64 | 34.00 | 51.17 |
| Bank of India Small Cap Fund | Small Cap Fund | 1,341.05 | 0.55 | 28.46 | 41.13 |
| Quant Infrastructure Fund | Sectoral Fund - Infrastructure | 4,103.61 | 0.66 | 34.17 | 40.99 |
| Nippon India Small Cap Fund | Small Cap Fund | 60,372.55 | 0.63 | 32.95 | 39.84 |
| Quant Mid Cap Fund | Mid Cap Fund | 8,747.40 | 0.58 | 32.48 | 39.47 |
| Quant ELSS Tax Saver Fund | Equity Linked Savings Scheme (ELSS) | 10,527.57 | 0.71 | 27.30 | 38.49 |
| Canara Rob Small Cap Fund | Small Cap Fund | 11,499.07 | 0.42 | 26.89 | 38.22 |
| Quant Flexi Cap Fund | Flexi Cap Fund | 7,435.74 | 0.59 | 26.54 | 38.06 |
| Edelweiss Small Cap Fund | Small Cap Fund | 3,816.30 | 0.40 | 28.15 | 36.82 |
| Tata Small Cap Fund | Small Cap Fund | 8,448.91 | 0.30 | 29.74 | 36.59 |
Disclaimer: Please note that the above list is for educational purposes only, and is not recommendatory. Please do your own research or consult your financial advisor before investing.
Note: The data on the list of the best equity mutual funds is from 2nd September 2024. This data is derived from the Tickertape Mutual Funds Screener.
- Plan: Growth
- Category: Equity
- 5Y CAGR: Sorted from Highest to Lowest
🚀 Pro Tip: You can use Tickertape’s Mutual Fund Screener to research and evaluate funds with over 50+ pre-loaded filters and parameters.
Best Equity Mutual Funds for Long-Term: An Overview
Here is a brief overview of the top 10 equity mutual funds in India listed above:
Quant Small Cap Fund
Launched in January 2013, Quant Small Cap Fund focuses on investing primarily in small-cap companies with strong growth potential. The fund aims to generate long-term capital appreciation by diversifying across various sectors. It employs a data-driven approach and dynamic risk management strategies to capture opportunities in the small-cap segment.
As of 2nd September 2024, the fund has an Assets Under Management (AUM) of Rs. 24,529.77 cr. It has delivered a CAGR of 34.00% over the past three years and 51.17% over the past five years, with an expense ratio of 0.64%.
Bank of India Small Cap Fund
Bank of India Small Cap Fund, launched in December 2018, seeks to generate long-term capital appreciation by investing predominantly in equity and equity-related instruments of small-cap companies. The fund follows a blend of growth and value styles to identify high-quality businesses.
The fund’s AUM stands at Rs. 1,341.05 cr. Over the past three years, it has achieved a CAGR of 28.46% and a five-year CAGR of 41.13%. The expense ratio of the fund is 0.55%.
Quant Infrastructure Fund
Introduced in August 2007, Quant Infrastructure Fund targets investments in infrastructure-related sectors, including construction, cement, metals, and more. The fund aims to capture growth opportunities in sectors that are the backbone of economic development.
The fund has an AUM of Rs. 4,103.61 cr., delivering a three-year CAGR of 34.17% and a five-year CAGR of 40.99%. The expense ratio is 0.66%.
Nippon India Small Cap Fund
Nippon India Small Cap Fund was launched in September 2010 and primarily invests in small-cap companies to provide long-term capital growth. The fund employs a bottom-up approach to identify high-potential companies with robust fundamentals.
Currently, the AUM of the fund is Rs. 60,372.55 cr. It has achieved a three-year CAGR of 32.95% and a five-year CAGR of 39.84%, with an expense ratio of 0.63%.
Quant Mid Cap Fund
Launched in April 1998, Quant Mid Cap Fund focuses on investing in mid-cap companies, balancing growth potential and stability. The fund seeks to identify companies with strong growth prospects and sustainable business models.
The fund’s AUM is Rs. 8,747.40 cr. It has reported a three-year CAGR of 32.48% and a five-year CAGR of 39.47%, while its expense ratio stands at 0.58%.
Quant ELSS Tax Saver Fund
Quant ELSS Tax Saver Fund, introduced in December 2000, is an Equity Linked Savings Scheme (ELSS) that provides tax benefits under Section 80C of the Income Tax Act. The fund aims to generate long-term capital appreciation while offering tax deductions to investors.
With an AUM of Rs. 10,527.57 cr., the fund has achieved a three-year CAGR of 27.30% and a five-year CAGR of 38.49%. Its expense ratio is 0.71%.
Canara Rob Small Cap Fund
Launched in October 2019, Canara Rob Small Cap Fund primarily invests in small-cap stocks with high growth potential. The fund employs an active investment strategy focused on identifying undervalued companies.
The fund’s AUM is Rs. 11,499.07 cr., with a three-year CAGR of 26.89% and a five-year CAGR of 38.22%. The expense ratio is 0.42%.
Quant Flexi Cap Fund
Introduced in March 1997, Quant Flexi Cap Fund invests across large, mid, and small-cap companies, offering a diversified portfolio with a flexible approach to capital allocation. The fund aims for long-term capital appreciation by dynamically shifting among various market caps.
The fund manages an AUM of Rs. 7,435.74 cr. It has delivered a three-year CAGR of 26.54% and a five-year CAGR of 38.06%, with an expense ratio of 0.59%.
Edelweiss Small Cap Fund
Launched in February 2019, Edelweiss Small Cap Fund focuses on small-cap stocks with significant growth prospects. The fund follows a rigorous bottom-up approach to identify businesses with robust fundamentals.
The AUM of the fund is Rs. 3,816.30 cr. It has reported a three-year CAGR of 28.15% and a five-year CAGR of 36.82%. The expense ratio is 0.40%.
Tata Small Cap Fund
Tata Small Cap Fund, launched in November 2018, primarily invests in small-cap companies aiming for long-term capital growth. The fund emphasises identifying companies with strong financials and growth potential.
The fund’s AUM stands at Rs. 8,448.91 cr. It has achieved a three-year CAGR of 29.74% and a five-year CAGR of 36.59%, with an expense ratio of 0.30%.
How to Invest in Equity Mutual Funds?
Investing in equity mutual funds can be a straightforward process. Here’s a guide to get you started:
- Open a demat/trading/brokerage account. Investors can open a demat account with smallcase!
- Register online at any AMC website.
- Explore different equity funds to figure out which one suits your investment objectives.
- Investors can use tools like the Tickertape Mutual Fund Screener to sort through these funds and explore their fundamentals and performance in the past.
- Proceed to invest by clicking on the appropriate option and specifying the amount and investment mode (SIP or Lumpsum).
- Submit your KYC details, including your PAN number and bank details, to finalise your investment.
Note: It is important to conduct thorough research and consult a financial advisor before investing in anything.
However, if you’re confused about which stocks to pick, you can explore smallcases:
- smallcases are readymade portfolios of stocks/ETFs, that are based on a theme idea or strategy
- They’re created and managed by SEBI-registered experts
- smallcase.com offers over 200+ stock portfolios, created by 180+ managers
- Some of the popular smallcases among new investors are as follows:
Disclosures for aforementioned smallcases
What are Equity Mutual Funds?
An equity fund, as per SEBI regulations in India, is a mutual fund primarily investing at least 65% of its assets in equity stocks. Unlike debt and hybrid funds, equity mutual funds carry higher risk but offer greater returns. Their performance is influenced by market fluctuations.
Equity mutual funds can be actively or passively managed and classified based on market capitalisation, investment style, and geographical focus. Market capitalisation categories include large cap, mid cap, small cap, and multi cap funds. Sector-specific funds target industries like FMCG or banking, while international funds invest in overseas stocks. Equity-linked savings schemes, categorised as equity mutual funds, allocate over 80% of their assets to equity, providing a diversified portfolio and qualifying for tax deductions under section 80C.
Types of Equity Mutual Funds
Equity funds vary based on their management approach: Active or Passive.
In Active Funds, a fund manager conducts market research, analyses company performance, and selects the best stocks for investment.
In Passive Funds, the fund manager constructs a portfolio that mimics a popular market index, such as Sensex or Nifty.
Various types of direct equity funds exist, each with distinct characteristics:
- Large Cap funds invest a minimum of 80% in SEBI-authorized large-cap stocks.
- Mid Cap funds allocate at least 65% to SEBI-classified mid-cap stocks.
- Small Cap funds invest a minimum of 65% in SEBI-defined small-cap stocks.
- Large and Mid Cap funds distribute investments between large-cap and mid-cap stocks, with a minimum threshold of 35% for each.
- Multi-Cap funds allocate a minimum of 75% to equity and a minimum of 25% to large-, mid-, and small-cap stocks.
Additional equity mutual fund schemes based on investing styles
- Dividend Yield Funds primarily invest in dividend-yielding stocks, with at least 65% in equity-related instruments.
- Value Funds follow a value investment strategy, investing 65% in equity and related securities.
- Contra Funds pursue a contrarian investment strategy, allocating 65% to equity and related securities.
- Sectoral/Thematic Funds invest 80% of assets in a specific theme or sector, as mandated by SEBI.
- Focused Funds can invest in a maximum of 30 stocks from small, mid, or large caps, with 65% in equity and related instruments.
- ELSS (Equity Linked Savings Scheme) has a 3-year lock-in period, offering tax benefits and requiring 80% investment in equity and related securities.
How do Equity Funds Work?
Equity mutual funds primarily invest in company stocks, allowing investors to become partial owners of those companies. When investing in equity funds, the choice of stocks depends on the fund’s category, which is regulated by SEBI and determined by its investment style or universe. For example, Large Cap Funds must invest at least 80% of their assets in India’s top 100 companies by market capitalisation, making them one of the best equity mutual funds for long-term stability. On the other hand, Mid Cap Funds invest a minimum of 65% in mid-sized companies, aiming for higher returns with a balanced approach to risk.
Equity fund managers, who are market and finance experts, carefully select stocks based on detailed analysis of company profitability, sector resilience, and economic conditions. Their research helps determine which equity funds are best by guiding decisions on stock selection, purchase prices, and allocation quantities. Fund managers continuously track mutual fund performance and market trends, allowing them to make tactical decisions to optimise returns on equity mutual funds.
If a company underperforms, it may be removed from the portfolio, while high-growth stocks are added early to capture potential gains. For those looking to invest in equity, fund managers’ expertise plays a key role in managing volatility and enhancing returns, making equity funds a popular choice among investors seeking long-term growth and high return mutual funds.
How do Equity Funds Earn?
The top equity funds generate returns through two primary mechanisms:
- Firstly, they capitalise on the appreciation of stock prices. The fund manager continuously monitors the market, strategically choosing when to sell stocks that have significantly appreciated. The profit realised from selling at a higher price than the purchase price constitutes capital gains. The fund manager reinvests these gains to facilitate compounding, thereby increasing the overall returns on investment.
- Secondly, equity funds receive dividends from the companies in which they hold ownership stakes. When companies perform well, they distribute profits to shareholders in the form of dividends. The fund manager allocates these dividends strategically to further enhance returns.
Features of the Best Equity Mutual Funds
When evaluating the difference between equity and mutual funds, especially in choosing the best equity mutual funds for long-term investment, it’s essential to consider specific features that distinguish top performers. Understanding ‘what is equity mutual fund’, and how it fits into your financial goals is crucial for making informed decisions.
Consistent Performance
The top 5 equity mutual funds often showcase consistent performance across various market cycles, highlighting their resilience. Analysing long-term mutual fund performance, particularly return on equity mutual funds, helps investors assess stability and growth potential.
Low Expense Ratios
Cost efficiency plays a significant role when you invest in equity funds. The best high returns mutual funds typically have low expense ratios, allowing a higher portion of returns to remain in your pocket. Evaluating the expense ratio is key when comparing mutual funds equity options.
Experienced Fund Management
The involvement of seasoned managers, especially in the best equity mutual funds for long-term, greatly impacts the success of the funds. Their expertise is essential for navigating market fluctuations and maximising return on equity mutual funds.
Diversification Strategies
A diversified portfolio is vital in top growth mutual funds. When choosing which equity fund is best, consider how well the fund spreads its investments across sectors. Diversification is a critical factor in mitigating risks associated with long-term mutual funds.
Risk-Adjusted Returns
For those looking to invest in equity funds, examining risk-adjusted returns is essential. It provides a complete picture of how well a fund balances risk and reward, a key measure when comparing which equity mutual fund is best for your portfolio.
Transparent Communication
Top-performing equity mutual funds maintain clear communication with investors, detailing strategies, portfolio compositions, and market outlooks. This transparency helps investors make confident decisions about which equity mutual funds are best suited to their needs.
Considering these factors, including the cut-off time for equity mutual funds and fund management strategies, can help investors identify the best equity mutual funds for long-term growth and stability. Evaluating these criteria ensures that your investments align with your financial goals, helping you choose the top equity mutual funds that fit your strategy.
Who Should Invest in the Best Equity Mutual Funds?
Equity-oriented funds, with a minimum of 65% in equity or equity-oriented securities, qualify for tax computation benefits. Conversely, all other schemes are categorised as Other schemes.
For those interested in stock market investments but lacking time or expertise, Equity Mutual Funds provide a convenient option. Simply choose a suitable fund and invest regularly, leaving the market analysis to the fund manager. They assess key indicators like company profitability, survival resilience, and sector performance.
Investors desiring equity exposure with minimal amounts can start with Equity Funds, beginning at just ₹100.
Equity Funds, though short-term volatile, offer the potential for substantial long-term returns. Investors with goals beyond 5 years, such as retirement or children’s education, can consider Equity Funds. Even for those without specific goals but seeking higher returns over a minimum 5-year horizon, Equity Funds are a viable option.
The best Equity Fund for SIP also caters to investors aiming for both tax savings and long-term wealth growth. Equity Linked Saving Schemes (ELSS), a type of Equity Fund, enables investors to reduce taxable income by ₹1.5 lakh under Section 80C while earning attractive returns.
Factors to Consider Before Investing in the Best Equity Mutual Funds
Here are the key factors to consider before investing in the best equity mutual funds:
Performance History
High-performing large cap equity mutual funds demonstrate a consistent track record of delivering superior returns over multiple years, outperforming benchmarks and competitor funds. Examining this performance history is crucial in identifying potential investment opportunities.
Business Cycle Evaluation
To pinpoint the best equity savings funds, investors should assess a fund’s performance across various business cycles. This analysis provides insights into the fund’s resilience and adaptability, offering a more comprehensive view of its potential for sustained success.
Clear Objectives
Long-term success in equity investments is often linked to funds with well-defined objectives. Funds that articulate clear goals can effectively diversify investments, ultimately leading to more favorable returns for investors.
Objective Assessment
After thoroughly evaluating a fund’s objectives, investors can better predict its potential for delivering satisfactory yields. This step is crucial in aligning investment strategies with personal financial goals.
Extended Performance History
Funds with an extended performance history are often considered more reliable choices. This is particularly important because it allows investors to assess a fund’s performance not only in favourable market conditions but also during downturns, offering a more comprehensive perspective.
Expense Ratio Consideration
In the search for the best equity mutual funds in 2024, investors should pay attention to the expense ratio. Lower fees charged by the fund house for managing investments result in reduced overall expenses for investors, making these funds more cost-effective.
Fund Manager Expertise
Successful and the best equity funds are not solely driven by market dynamics; the expertise of the fund manager is equally vital. Funds managed by individuals with a proven track record tend to deliver profitable equity mutual fund returns consistently.
Manager’s Role in Success
Fund managers play a pivotal role in handling investors’ money, and their expertise significantly contributes to a fund’s success. Assessing the history and expertise of the fund manager provides investors with confidence in entrusting their investments to capable hands.
Risks Involved While Investing in the Best Equity Mutual Funds
Here are a few risks to consider before investing in the best equity mutual funds:
- Market Risk: Investing in equity mutual funds exposes investors to market risk, which arises from the unpredictable performance of the market. Factors such as inflation, deflation, political instability, and fluctuations in interest rates contribute to this risk. When the market experiences poor performance, investors may incur losses, highlighting the inherent volatility associated with equity investments.
- Interest Rate Risk: Another crucial risk in equity mutual funds is interest rate risk, contingent upon fluctuations in credit availability and borrower demand. If interest rates rise during the investment period, the prices of securities may decrease. This inverse relationship between interest rates and security prices can impact the overall value of the investment, making it imperative for investors to consider and manage this risk.
- Liquidity Risk: Investors face liquidity risk when redeeming investments without incurring losses in the fund’s value. Liquidity challenges may arise due to various factors, including increases in interest rates and fluctuations in currency value. These circumstances can make selling funds and arranging capital a complex process, underscoring the importance of understanding and navigating liquidity risk in the context of equity mutual fund investments.
Benefits of Investing in the Best Equity Mutual Funds
When exploring the landscape of investment opportunities, the advantages of choosing the best equity mutual funds become apparent. Here’s a breakdown of the key benefits:
Diversification for Risk Mitigation
Opting for top-performing equity mutual funds allows investors to access a diversified portfolio of stocks. This diversification is a powerful risk management strategy, spreading investments across various sectors and companies. Consequently, the impact of poor performance in a single stock is minimised, providing a more stable and resilient investment.
Active Management for Strategic Decision-Making
The best equity mutual funds are actively managed, meaning that investment professionals make strategic decisions based on market analysis and opportunities. This proactive approach allows the fund to capitalise on favourable market conditions and adjust the portfolio to navigate challenges, potentially leading to better returns over time.
Liquidity and Accessibility
One of the practical benefits of equity mutual funds is their liquidity. Investors can easily buy or sell fund units at the net asset value (NAV). This liquidity ensures flexibility and accessibility, enabling investors to manage their positions in response to changing market conditions or individual financial goals.
Professional Fund Management Expertise
Investing in top equity mutual funds grants access to professional fund management expertise. Experienced investment professionals actively monitor the market, conduct thorough research, and make informed decisions on behalf of investors. This professional management adds a layer of confidence and expertise to the investment strategy.
Tax Efficiency for Long-Term Gains
Long-term investors can benefit from the tax advantages associated with equity mutual funds. Capital gains on investments held for over a year may qualify for preferential tax treatment. This tax efficiency can enhance overall returns and is an important consideration for those with a focus on building wealth over an extended period.
Transparency for Informed Decision-Making
The best equity mutual funds prioritise transparency, providing investors with regular updates and disclosures. This transparency empowers investors with the information needed to make informed decisions, fostering a sense of confidence and clarity about the performance and strategy of the fund.
How to Choose Best Equity Mutual Funds for Investing?
Considering equity funds for investment? Here’s a quick guide to determine if they align with your financial goals:
- Long-Term Growth: Seek steady wealth expansion over time by embracing the patience required for substantial returns.
- Risk Comfort: Embrace market fluctuations with a high risk tolerance. Short-term volatility is expected, and you’re ready for potential ups and downs in the pursuit of better returns.
- Financial Planning: Connect equity funds to a clear long-term financial plan or retirement goal. View them as a strategy for potential wealth growth with added tax advantages for future financial security.
- Active Monitoring: Stay informed and keep a watchful eye on your investments. Regularly monitor market trends and economic indicators to make well-informed decisions.
- Tax-Efficient Choices: Value tax efficiency? Explore equity-linked savings schemes (ELSS) for dual benefits – tax savings and potential wealth growth.
- Inflation Hedge: Safeguard your savings against inflation. Consider equity funds as a potential avenue to outpace inflation, ensuring your savings maintain their purchasing power over time.
What are the Returns on the Best Equity Mutual Funds & How are they Calculated?
Calculating returns on the best equity mutual funds involves a straightforward yet crucial process. Total returns comprise two components: capital appreciation and dividend income. The former represents the increase in the fund’s net asset value (NAV) over time, while the latter accounts for any dividends distributed to investors.
To compute the overall return, divide the change in NAV by the initial NAV, then add any dividends received. Express this figure as a percentage to gauge the fund’s performance accurately. It’s essential to consider the timeframe for evaluation, as short-term fluctuations may not reflect the fund’s true potential.
Investors can leverage various metrics, such as Compound Annual Growth Rate (CAGR), to assess long-term performance. Keep in mind that past performance doesn’t guarantee future results. Regularly reviewing a fund’s methodology and comparing it with market benchmarks ensures a more comprehensive understanding of its returns.
In essence, understanding how returns are calculated empowers investors to make informed decisions based on a fund’s historical performance, fostering a more strategic and measured approach to equity mutual fund investments.
Taxation on Equity Mutual Funds as per the Union Budget for 2024-25
Equity mutual funds are usually taxed according to their holding period. Being aware of these tax implications is essential for making informed financial decisions. The Union Budget for 2024-25 has made significant changes to the taxation on equity mutual funds. Here we have listed these changes, along with the revised tax rates for equity mutual funds:
Short-Term Capital Gains Tax
Any gains made when holding equity mutual funds for less than 12 months are considered short-term capital gains. The Union Budget 2024-25 increased the tax rate on these gains to 20%. The STCG tax rate was previously 15%.
Long-Term Capital Gains Tax
For equity mutual funds held for over a year, gains are classified as long-term capital gains. The new budget introduces these key changes:
- Tax-Free Limit: The capital gains up to Rs. 1.25 lakh per year are tax-free. This is an increase from the previous limit of Rs. 1 lakh.
- Tax Rate: The gains exceeding Rs. 1.25 lakh are now taxed at a flat rate of 12.5%. This is an increase from the previous rate of 10%.
- Indexation: The benefit of indexation, which allowed investors to adjust the purchase price for inflation, has been removed for all asset classes, including equity mutual funds.
Indexation was a method that allowed investors to adjust the purchase price of assets for inflation. This adjustment reduced taxable profits when selling assets like property or gold. Previously, these long-term capital gains were taxed at 20%. The new rule imposes a flat 12.5% tax on all long-term capital gains but eliminates any indexation benefits.
| Capital Gains Tax | Holding Period | Old Rate | New Rate |
| Short-Term Capital Gains (STCG) | Less than 12 months | 15% | 20% |
| Long-Term Capital Gains (LTCG) | More than 12 months | 10% | 12.50% |
To Wrap It Up…
To sum up, the exploration of the best equity mutual funds has shed light on crucial aspects to consider when navigating this dynamic investment landscape. From historical performance metrics to expense ratios and fund managers’ strategies, the pursuit of excellence in equity funds demands a discerning approach. Investors should prioritise aligning fund choices with their risk tolerance, financial goals, and investment horizon.
Regular monitoring and staying attuned to market dynamics remain essential for those seeking to optimise their equity investment portfolio. The journey towards identifying the best equity mutual funds is an ongoing process, requiring diligence, research, and a commitment to informed decision-making in the ever-evolving realm of financial markets.
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Frequently Asked Questions(FAQs) on Best Equity Mutual Funds
You can consider holding equity funds for 8-10 years if you’re aiming for long-term goals.
The best Equity Mutual Funds invest in a diversified portfolio of stocks, aiming for a balanced mix that aligns with their investment objectives and strategy. These funds typically focus on sectors and industries with growth potential, aiming to provide investors with a combination of capital appreciation and risk mitigation.
The returns on the best equity mutual funds vary based on market conditions and fund performance. It is crucial to regularly check the fund’s historical performance and consult with a financial advisor to make informed investment decisions.
Experts suggest considering the purchase of mutual funds when their Net Asset Value (NAV) is below their unit price. Doing so can help maximise returns. It’s also advisable to contemplate investments during market downturns.
The lock-in period for the best equity mutual funds varies, and investors should carefully review the specific terms outlined in each fund’s prospectus. Different funds may have different lock-in periods, so it’s crucial to assess this information before making investment decisions.
