5 Equity Fund Categories That Performed the Highest Returns in 10 Years

Sector and thematic mutual funds dominate the top five categories that have returned 15-20 percent over the past decade.

We are often told that diversified mutual funds are ideal for long-term investments. But the experience of the last 10 years shows that even small sector and thematic funds performed well. Small and mid-cap funds are also among the best in terms of returns.

1) Technology Sector Equity Fund 

Equity funds that focused on the technology sector topped the charts in the 10-year period, yielding 19.7 percent, according to Value research data. Thanks to the rally in IT stocks, these funds were raised from global clients investing in digital innovation and transformation.

2) Small-cap Funds

Small-cap funds rank second on the list with an annual return of 17.8 percent over the past 10 years. Much of the gains in these funds are due to the stellar rally in the small-cap space from the lows of March 2020. Several small-cap funds posted returns of 100 percent or more in the past 16 months.

3) Mid-cap funds

Mid-cap funds didn't lag far behind their small-cap peers, with annual returns of 17.2 percent over the past 10 years. This category was one of the beneficiaries of the value investing style that found favor with money managers once again. The broader market rally of March 2020 also helped.

4) Pharmaceutical Stocks Equity Fund

The funds that invested exclusively in pharmaceutical stocks, including hospitals, diagnostic laboratories, drug manufacturers, etc. they obtained returns of 16.7 percent in the last 10 years. With the COVID-19 pandemic in the past year and a half, these actions returned to account after a few lull years earlier.

5) Multinationals Listed in India

Funds focused on the stocks of multinationals listed in India returned 15.6 percent over the past 10 years. But its performance in recent years has been below average. The high valuations of these stocks and the availability of domestic alternatives meant that demand for these stocks may have dropped a bit.

The returns obtained over the last 10 years may not repeat themselves in the next decade. These are not recommendations. Thematic and sector funds are risky. Choose and invest in funds based on your risk appetite, target horizon, and availability of surpluses. Seek the help of an advisor or expert if you cannot decide on your own.