Best Equity Funds
3Yr. Returns
5Yr. Returns

Best Equity Mutual Funds 2019 : Top Performing Equity Mutual Funds

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Equity Mutual Funds invest primarily in equity shares of companies. As per SEBI, if a fund invests at least 65% or more of its portfolio in equities, it is classified as an equity-oriented fund.

This article on best equity mutual funds covers the following:
  1. What are Best Equity Mutual Funds?
  2. Who should invest in Best Equity Mutual Funds?
  3. Things to consider as an investor
  4. How to evaluate Best Equity Mutual Funds?
  5. Top 5 Best Equity Mutual Funds in India
  6. Conclusion

1. What are Best Equity Mutual Funds?

Usually best equity mutual funds invest more than 65% of their portfolio in stocks. Such funds could be actively/passively managed (Index funds). Best equity mutual funds tend to give high returns over a medium to long term horizon.

Since they are heavily invested in stocks, they are considered risky. The fund value may experience frequent fluctuations. Because of this, best equity mutual funds may be preferred by aggressive investors.

As equity funds are risky bets, you need analyse various parameters before choosing the fund.


2. Who should invest in Best Equity Mutual Funds?

You need to consider your risk appetite and investment horizon while investing in equity funds. These funds are suitable for an investor having an investment horizon of say 5 years or more. But a short-term investor may not be in such an opportune position because of stock market fluctuations.

If saving taxes is on your mind, then ELSS is regarded as the best equity mutual fund under Section 80C of the Income Tax Act. ELSS has the shortest lock-in period of 3 years. Moreover it gives higher returns than other investments eligible under Section 80C.

A budding investor may choose to go for large-cap equity funds as these funds invest in equity shares of well-established companies which are known to give stable returns in the long run. Conversely, an experienced investor may choose to invest in diversified equity funds to get the best combination of risk and return.


3. Things to consider as an investor

a. Fund Objectives

Best equity mutual funds aim to achieve wealth accumulation by means of robust investment strategy. The stock picking is based on investing style which  can be value investing or growth investing. Value investing involves picking undervalued stocks whose price will rise eventually leading to a profit.

b. Fund Types

Equity funds are further divided into purely large-caps/mid-caps/small-cap funds. Small-cap funds and mid-cap funds have high risk-high return potential than Best large cap mutual funds. Then there are multi-cap funds which invest across different capitalisations to maintain an optimally diversified portfolio.

c. Risk

Equity funds face the biggest risk which is known as market risk. The equity funds are affected by the movements of underlying benchmark like Nifty or Sensex. An overall rise or fall in the value of the index leads to a fluctuation in the fund value of equity funds. Such volatility is higher than that experienced by debt funds or money market funds.

d. Cost

Equity funds charge an expense ratio to manage your money. SEBI has mandated the upper limit of expense ratio to be 1.05%. Actively-managed equity funds have a higher expense ratio as compared to index funds.

e. Investment Horizon

Equity funds are basically suitable for individuals who have a long-term investment horizon. Usually, the fund experiences a lot of fluctuations during the short-run. This fluctuation averages out in the long-run of say more than 7 years.

The fund is, thus, able to give returns in the range of 10%-12%. Those who choose best equity mutual funds need to be prepared to stick around at least for the said period to enable the fund to realize its full potential.

f. Financial Goals

Best equity mutual funds can be ideal for achieving long-term financial goals like wealth creation or retirement planning. Being a high risk-high return haven, these funds are capable of generating enough wealth which may help you to retire early and pursue your passion in life.   best equity mutual funds

4. How to evaluate Best Equity Mutual Funds?


a. Fund returns

Fund performance in terms of the returns on investment is considered the most important parameter for ranking or selection of funds. Investors may look for returns for a period of at least 5-10 years.

One may, in fact, select funds which have consistently beaten their benchmark indices (index to which a fund’s returns are compared). They should also fare reasonably well when compared with their peer set over the longer time frames.

b. Fund history

A strong parentage from a trusted fund house is necessary before you invest in a fund. You must have trust in the asset management company. Ideally it should also have a clean and long business history of at least say 5 years. It ensures that the fund has seen all the market cycle of slumps and rally.

c. Expense ratio

Expense ratio is the annual expense incurred by funds expressed in percentage of their average net asset. This is what the mutual funds charge investors for managing money on their behalf.

d. Financial ratios

With significant risks involved, the risk return ratio becomes an important factor for consideration. In order to judge this, Sharpe Ratio is an important metric associated with equity fund’s performance.

Sharpe Ratio is an indicator of risk-adjusted return. It represents the excess return given by the fund for a given level of risk. Simply put, the higher the Sharpe ratio, the better is the risk adjusted return for that fund.


5. Top 5 Best Equity Mutual Funds in India

While selecting a fund, you need to analyse the fund from different angles. There are various quantitative and qualitative parameters which can be used to arrive at the best equity funds as per your requirements. Additionally, you need to keep your financial goals, risk appetite and investment horizon in mind.

The following table represents the top 10 large-cap funds in India based on the past 5 year returns. Investors may choose the funds based on a different investment horizon like 10 years returns. You may include other criteria like financial ratios as well.

Equity Fund Name
3 year5 year
L&T India Value Growth10.44%21.65%
Mirae Asset India Equity Fund Regular Growth13.96%18.65%
Aditya Birla Sun Life Frontline Equity Fund Growth10.24%14.44%
SBI Magnum Multi Cap Fund Regular Growth11.02%18.22%
SBI Bluechip Fund Regular Growth8.76%15.52%
ICICI Prudential Bluechip Fund Growth11.44%14.24%
*The order of funds doesn’t suggest any recommendations. Investors may choose the funds as per their goals. Returns are subject to change.  

6. Conclusion

Many a time investing in equity funds becomes complex. In case you don’t possess enough financial knowledge and are finding it too difficult to understand, then just go for ClearTax Invest. You can invest in hand-picked funds in a hassle free and paperless manner.