{"id":20701,"date":"2021-07-06T09:42:25","date_gmt":"2021-07-06T09:42:25","guid":{"rendered":"https:\/\/www.tatacapital.com\/blog\/?p=20701"},"modified":"2025-05-26T11:12:40","modified_gmt":"2025-05-26T11:12:40","slug":"what-are-the-average-returns-on-mutual-funds","status":"publish","type":"post","link":"https:\/\/www.tatacapitalmoneyfy.com\/blog\/mutual-funds\/what-are-the-average-returns-on-mutual-funds\/","title":{"rendered":"Average Returns on Mutual Funds – Tata Capital Moneyfy"},"content":{"rendered":"\n

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When choosing a mutual funds scheme for investment, you want to make sure you’re parking your money in the right place. After all, as Abigail Johnson puts it, “Returns matter a lot. It’s our capital.” But how do you know which MF scheme will bring back good returns? Well, you consider the average returns on mutual funds.<\/p>\n\n\n\n

Why Check Average Returns on Funds?<\/h2>\n\n\n\n

The average returns on a funds scheme is a simple mathematical average of a series of returns gained over time.<\/p>\n\n\n\n

Because short-term performances vary based on market fluctuations and economic conditions, it’s better to consider long-term performances by reviewing the mutual funds’ average returns. India alone has over 2,500 registered fund schemes, so when it comes to funds selection, consistency of performance matters a lot.<\/p>\n\n\n\n

While historical or average returns cannot forecast actual future returns, they certainly give you a snapshot of how the MF performed across different market cycles.<\/p>\n\n\n\n

However, at the same time, it’s equally important to define a benchmark to assess the fund performance accurately. When you go looking for a funds scheme in the market, select a fund that consistently outperforms its benchmark.<\/p>\n\n\n\n

Consider Category Performance<\/h2>\n\n\n\n

Comparing returns of two different types of funds is like comparing apples to oranges. Since there is a broad spectrum of MFs, you must decide on a benchmark to assess the performance of a fund. And one of the best ways to gauge the average rate of return on mutual funds<\/a> is through category performance.<\/p>\n\n\n\n

This is because it factors in the expense ratio, which is a percentage of the various charges levied by your fund house for managing the fund. It essentially gives you the value-for-money aspect of the fund. So, if the average return on a fund is 10% and the expense ratio is 1%, you earn a return of 9% from the investment. <\/p>\n\n\n\n

Let’s break down the average returns based on three broad categories of MFs.<\/p>\n\n\n\n

Additional Read: <\/strong>The SMART approach to your first financial plan<\/a><\/p>\n\n\n\n

1. Debt funds<\/h2>\n\n\n\n

These funds invest in money market instruments like corporate bonds<\/a>, debentures, government bonds, etc., with a fixed maturity date and interest rate. Thus, they typically offer steady growth and income. If you consider historical returns, debt MFs <\/a>have delivered an average return of 8%-9%.<\/p>\n\n\n\n

Here are some top-performing debt funds in India currently.<\/p>\n\n\n\n

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Fund<\/strong><\/td>3-Year Performance<\/strong><\/td>5-Year Performance<\/strong><\/td><\/tr>
IDFC Government Securities Fund-Constant Maturity Plan-Growth-Direct<\/td>10.28%<\/td>12.49%<\/td><\/tr>
ICICI Prudential Constant Maturity Gilt Fund – Direct Plan \u2013 Growth<\/td>10.06%<\/td>11.97%<\/td><\/tr>
ICICI Prudential Constant Maturity Gilt Fund<\/td>9.84%<\/td>11.76%<\/td><\/tr>
DSP Government Securities Fund – Direct Plan – Growth<\/td>9.88%<\/td>11.59%<\/td><\/tr>
Nippon India Gilt Securities Fund – Direct Plan Defined Maturity Date Option – Growth<\/td>10.36%<\/td>11.25%<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n

2. Equity funds<\/h2>\n\n\n\n

These types of funds usually comprise a portfolio of equities and equity-related products, managed either passively or actively. They belong to the ‘high risk, high return’ category. Over the historical period, the average rate of return on equity funds totals to 10-12%, sometimes even higher.   <\/p>\n\n\n\n

Here are some top-performing equity funds in India currently.<\/p>\n\n\n\n

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Fund<\/strong><\/td>3-Year Performance<\/strong><\/td>5-Year Performance<\/strong><\/td><\/tr>
ICICI Prudential Technology Fund – Direct Plan – Growth<\/td>25.68%<\/td>32.33%<\/td><\/tr>
Aditya Birla Sun Life Digital India Fund – Growth-Direct Plan<\/td>25.59%<\/td>31.74%<\/td><\/tr>
ICICI Prudential Technology Fund<\/td>24.65%<\/td>31.25%<\/td><\/tr>
PGIM India Global Equity Opportunities Fund – Direct Plan \u2013 Growth<\/td>22.49%<\/td>31.07%<\/td><\/tr>
Aditya Birla Sun Life Digital India Fund Growth<\/td>24.42%<\/td>30.43%<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n

3. Hybrid Funds<\/h2>\n\n\n\n

Hybrid funds are a mix of debt and equity<\/a>-related products, giving you the best of both worlds. They usually bring you good returns while also cushioning your investment against market risks.<\/p>\n\n\n\n

<\/p>\n\n\n\n

Fund<\/strong><\/td>3-Year Performance<\/strong><\/td>5-Year Performance<\/strong><\/td><\/tr>
Quant Multi Asset Fund – Direct Plan-Growth<\/td>17.09%<\/td>26.14%<\/td><\/tr>
Quant Multi Asset Fund Growth<\/td>16.92%<\/td>25.83%<\/td><\/tr>
Quant Absolute Fund – Direct Plan-Growth<\/td>18.38%<\/td>24.73%<\/td><\/tr>
Quant Absolute Fund Growth<\/td>17.69%<\/td>23.66%<\/td><\/tr>
Kotak Asset Allocator Fund – Direct Plan – Growth<\/td>14.87%<\/td>17.98%<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n

Types of Mutual Fund Returns<\/h2>\n\n\n\n

There are several types of mutual fund returns that measure returns earned from a mutual funds investment over various periods of time, including:<\/p>\n\n\n\n