New and inexperienced investors often look for the top mutual funds when they start investing or want to invest more money.
They ask friends, colleagues, or online forums to find the “best” schemes. However, the answers they get are often confusing or unsatisfactory.
Do You Search the Internet?
When you search online, you may find many websites with ready-made lists of top funds. These lists are often created based only on short-term performance.
Sometimes, they include too many schemes from a single category because that category is currently trending.
Similarly, friends or colleagues may recommend the schemes they personally like or invest in. But these suggestions may not always match your own needs or risk profile.
The Idea of “Top Funds”
Many investors keep collecting names of top funds for years. They keep checking mutual fund forums because they are unsure whether those lists are reliable.
To help with this, ETMutualFunds has released a list of the top 10 mutual fund schemes.
They selected two schemes each from five popular equity mutual fund categories:
Aggressive Hybrid
Large-Cap
Mid-Cap
Small-Cap
Flexi-Cap
This list is meant to guide regular mutual fund investors. However, before choosing any scheme, you must check if it matches your goals and risk tolerance.
Top 10 Mutual Fund Schemes
Canara Robeco Large Cap Fund
Mirae Asset Large Cap Fund
Parag Parikh Flexi Cap Fund
HDFC Flexi Cap Fund
Axis Midcap Fund
Kotak Mid Cap Fund
Axis Small Cap Fund
SBI Small Cap Fund
SBI Equity Hybrid Fund
Mirae Asset Aggressive Hybrid Fund
Important Things to Remember Before Investing
Before investing, understand each category and check whether it suits your investment objective and risk profile.
Aggressive Hybrid Funds
Aggressive hybrid funds (previously called balanced or equity-oriented hybrid schemes) are suitable for beginners. They invest 65–80% in equity and 20–35% in debt.
Because of this mix, they are less volatile than pure equity funds. They are ideal for conservative equity investors who want long-term wealth creation with lower volatility.
Large-Cap Funds
Large-cap funds are for investors who want the safety of investing in the top 100 companies.
These funds are less volatile than mid-cap and small-cap funds and offer stability with moderate returns.
Flexi-Cap Funds
Flexi-cap funds (diversified equity funds) suit regular investors with moderate risk appetite. They invest across large-cap, mid-cap,
and small-cap stocks based on the fund manager’s strategy. This helps investors benefit from different sector or market movements.
Mid-Cap and Small-Cap Funds
Aggressive investors looking for higher returns can choose mid-cap and small-cap funds.
Mid-cap funds invest in medium-sized companies.
Small-cap funds invest in smaller companies with high growth potential.
These funds can be volatile but may offer higher long-term returns. They are suitable only if you have a long investment horizon and high risk tolerance.
Don’t Depend Only on “Best” or “Top” Searches
Searching for “best” or “top” funds may not always give the right answers. Always choose a scheme that matches your goal, risk profile, and investment duration.
If you’re new to investing or don’t understand mutual funds well, consult a mutual fund advisor.
Methodology for Selecting Hybrid Funds
ETMutualFunds shortlisted hybrid schemes based on:
Mean Rolling Returns: Calculated daily for the last three years.
Consistency (Hurst Exponent H):
H = 0.5 → Random returns (hard to predict)
H < 0.5 → Mean-reverting
H > 0.5 → Persistent trend (higher H = stronger trend)
Downside Risk: Only negative returns are considered.
X = returns below zero
Y = sum of squares of X
Z = Y / number of days
Downside risk = √Z
Outperformance:
Equity portion: Based on Jensen’s Alpha (last 3 years). Higher alpha = better performance.
Debt portion: Fund return – benchmark return (calculated using rolling returns).
Asset Size: Minimum ₹50 crore.
Methodology for Selecting Equity Funds
Equity funds were selected using the following parameters:
Mean Rolling Returns: Calculated daily for the last three years.
Consistency (Hurst Exponent H): Higher H = lower volatility.
H = 0.5 → Random
H < 0.5 → Mean-reverting
H > 0.5 → Persistent trend
Downside Risk: Calculated the same way as hybrid funds.
Outperformance: Based on Jensen’s Alpha for the last three years. Higher alpha = better risk-adjusted returns.
Asset Size: Minimum ₹50 crore.
