Direct plans of eight equity schemes have offered more than 20% returns in a 10-year horizon, data shows. Direct plans completed 10 years of existence in January, 2023. Direct plans of two small cap schemes topped the return charts, followed by a large & mid cap scheme, technology schemes, and mid cap schemes. (See table for details)
The direct plans of mutual funds completed 10 years in January. The investors had the option to invest in a direct plan of mutual funds from January 1, 2013. Sebi introduced direct plans with a view to offer well-informed investors a cheaper option. Direct plans do not spend money on commissions and marketing. Therefore, they have a lower expense ratio. Mutual fund advisors and financial experts believe the lower charges would help investors to make extra returns over a longer period.
That is why ETMutualFunds decided to take a look at the performance of these schemes in the 10-year period. Earlier, we looked at the performance of various equity mutual fund categories in the last 10 years. See: 10-year score card.
ETMutualFunds considered all equity and equity oriented categories – large cap, large & mid cap, small cap, ELSS, mid cap funds, value & contra funds, multi cap funds, flexi cap funds, focused funds, aggressive hybrid funds, arbitrage funds, balanced advantage & dynamic asset allocation funds, multi-asset allocation funds, equity savings, sectoral and thematic funds for the study. We calculated the rolling returns offered by these schemes from January 2, 2013 to January 2, 2023. For the study, we have used 10-year returns rolled on a daily basis. We filtered out the schemes that delivered less than 20% returns during the 10 year horizon. There were 231 direct schemes that have completed 10 years.
Among the eight schemes, two schemes delivered more than 25% returns. SBI small cap fund offered around 25.79% returns and Nippon India small cap fund offered around 25.01% returns. These two schemes are the biggest funds in the small cap category. Six other schemes offered more than 20% in 10 years.
Three small cap schemes made it to the list of direct equity schemes delivering more than 20% returns. Apart from small cap schemes, two schemes each from large & mid cap category and the technology sector made it to the list. Only one mid cap fund managed to offer more than 20% return in the 10-year horizon. None of the large cap schemes made it to the list.
Here’s how the direct schemes performed :
||10-Year rolling returns|
|SBI Small Cap Fund||25.79%|
|Nippon India Small Cap Fund||25.01%|
|Mirae Asset Emerging Bluechip Fund||22.44%|
|ICICI Prudential Technology Fund||22.32%|
|Aditya Birla Sun Life Digital India Fund||21.53%|
|DSP Small Cap Fund||21.35%|
|Canara Robeco Emerging Equities Fund||20.61%|
|Edelweiss Mid Cap Fund||20.44%|
Source: ACE MF, Returns from January 2 2013 to January 2 2023
Note, this is not the recommendation. This exercise is just to look at the performance of direct schemes. You need to include other factors like your goals, investment horizon, and risk profile while choosing any scheme to invest. For our recommendations, see: Best mutual funds to invest in 2023