Last Updated on December 29, 2021
Here are 18 mutual funds with better than index return & lower than index risk over the last 1,2,3,4 and 5 years! I have calculated this with trailing returns and trailing standard deviation (a measure of volatility) using the freefincal equity mutual fund consistency screener. This is an alternative way of short-listing mutual funds. However, it may not be as rigorous as this shortlist made with rolling returns and downside protection: List of Equity Mutual Funds with most consistent performance (Feb 2019).
How the list was prepared
- Compute fund return and index return over the last 1,2,3,4 and 5 years
- Compute fund and index standard deviation over the last 1,2,3,4 and 5 years
- Find fund return minus index return over each of these periods
- Fund fund standard deviation minus index standard deviation over each of these periods
- Plot (fund return minus index return) in the vertical axis versus (fund standard deviation minus index standard deviation) in the vertical axis
- This will provide four sections as shown below and we shortlist funds that fall in the upper left quadrant (yellow text) to choose funds with lower than index risk and higher than index returns over 1,2,3,4 and 5 years
Relative Risk vs Reward of Mutual Funds: three years
We consider 268 equity mutual funds. To get a full list of the funds and the benchmarks used, consult the freefincal equity mutual fund consistency screener.
We shortlist funds within the white rectangle over 1,2,3,4 and 5 years.
Relative Risk vs Reward of Mutual Funds: five years
List of 18 mutual funds with better than index return & lower than index risk!
So these are funds that were always found in the upper left quadrant.Notice the prominent absence of large cap funds and thinly populated other categories! Only Small cap funds are well represented perhaps because it is easy to stay less volatile than the index and that alone can beat the index during downturns.
| Category | Benchmark | Fund |
| EQ-ELSS | Nifty Largemidcap 250 TRI | Invesco India Tax |
| EQ-L&MC | Nifty Largemidcap 250 TRI | Invesco India Opportunities Fund |
| EQ-MC | NiftyMidcap150TRI | Axis Midcap Fund |
| EQ-MC | NiftyMidcap150TRI | Invesco India Midcap Fund |
| EQ-MLC | Nifty Largemidcap 250 TRI | Kotak Standard Multicap Fund |
| EQ-MLC | Nifty Largemidcap 250 TRI | Mirae Asset India Equity Fund |
| EQ-S INFRA | NSE Infra TRI | Franklin Build India Fund |
| EQ-S INFRA | NSE Infra TRI | LIC MF Infrastructure Fund |
| EQ-S INFRA | NSE Infra TRI | Taurus Infrastructure Fund |
| EQ-SC | NiftySmallCap50-TRI | Aditya Birla Sun Life Small Cap Fund |
| EQ-SC | NiftySmallCap50-TRI | DSP BlackRock Small Cap Fund |
| EQ-SC | NiftySmallCap50-TRI | Franklin India Smaller Companies Fund |
| EQ-SC | NiftySmallCap50-TRI | HSBC Small Cap Equity Fund |
| EQ-SC | NiftySmallCap50-TRI | ICICI Prudential Smallcap Fund |
| EQ-SC | NiftySmallCap50-TRI | Kotak Small Cap |
| EQ-SC | NiftySmallCap50-TRI | Reliance Small Cap Fund |
| EQ-SC | NiftySmallCap50-TRI | SBI Small Cap Fund |
| EQ-SC | NiftySmallCap50-TRI | Sundaram Small Cap Fund |
How to use this information
This is yet another way to shortlist mutual funds – another blind man touching the elephant. They are certainly good funds. Are they consistently good funds? To answer this, I will find a way to including rolling returns and risk study into this. The shortlist should be used only if you understand how it was calculated and how it differs from downside protection. For the moment, the non-small cap funds in this list can look at more closely by readers. Let me know your thoughts on this method -which is well known by analysts, you can get this information for each fund at Morningstar India. From the next edition of the freefincal screener, the full data will be available each month.
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