India over the past five years (2020-2025). This study aims to provide insights into the risk-return dynamics,

fund management strategies, and market trends that have influenced the performance of these funds. This study

employs an analytical approach based on secondary data sourced from various financial databases and mutual

fund websites. The top five funds in each category were selected based on their 5-year annualized returns as of

March 2025. The analysis reveals that equity funds, particularly those focused on small-cap and

sectoral/thematic investments, exhibited the highest returns (38-50%) but also carried significant risk. Hybrid

funds, such as multi-asset allocation and aggressive hybrid funds, provide a balance between equity-like

returns and reduced volatility (26-35%). Debt funds offered the lowest but most stable returns (7-13%), with

performance influenced by interest rate cycles and credit risk. This study highlights the consistent

outperformance of quantitative mutual funds across equity and hybrid categories, underlining the potential

Quantitative Strategies, etc.

Mutual funds within the equity, hybrid, and debt categories have garnered significant attention from both

investors and researchers because of their impact on investment strategies. In India, over the past five years,

mutual funds have gained prominence among individual and institutional investors, reflecting shifts in

investment patterns and preferences. Analysing the top five mutual funds in these categories provides insights

into their performance, risk-adjusted returns, and market efficiencies. Equity mutual funds primarily invest in

stocks, and their performance is contingent on market conditions and economic cycles. They are evaluated

based on their ability to generate positive alpha, which is indicative of a fund manager's proficiency in stock

regarding a fund's market timing abilities (Comer, 2006). Debt mutual funds, which invest in fixed-income

securities, are perceived as lower-risk than equity funds. However, their performance is influenced by market

conditions, such as interest rate fluctuations and credit risk. Studies suggest that larger bond funds may better

manage costs and achieve superior risk-adjusted returns (Philpot et al. 1998). To evaluate the performance of

these mutual funds in India over the past five years, it is essential to employ various performance evaluation

models, such as data envelopment analysis (DEA). This approach accounts for scale efficiency and the

influence of fund size on performance (Basso & Funari, 2016). These analyses provide investors with valuable

insights to make informed decisions based on empirical evidence and market trends.

The Indian mutual fund industry, although not as established as those in developed nations, has demonstrated

consistent growth. According to data available until the mid-2010s, the ratio of mutual fund assets under

associated with awareness, perceptions, and socioeconomic factors such as age, gender, occupation, income,

and education. Increased awareness of mutual fund products can positively influence investment volume.

Contrary to common concerns, risk perception does not significantly affect investment decisions in mutual

funds (Kaur and Kaushik, 2016). Furthermore, the concept of socially responsible investing (SRI) is gaining

prominence in the Indian mutual fund industry, in line with global trends. Environmental, Social, and

Governance (ESG) funds are gaining momentum, providing new opportunities for growth and capital inflow.

varied performance outcomes across different schemes (Vishali & Shafi, 2024). Overall, the Indian mutual

fund market continues to evolve, with an increasing emphasis on enhancing investor base diversity and

promoting awareness to effectively leverage untapped potential.

of the mutual funds. This understanding is crucial, as mutual funds exhibit varying levels of risk, and

performance metrics facilitate a comparative analysis on an equitable basis (Chen and Lin, 2006).

fund managers in terms of security selection and market timing. This evaluation can significantly impact

investors' decisions regarding fund investments, particularly when considering historical performance (Chang

& Lewellen, 1984).

employed by mutual funds concerning the fees charged. Such an evaluation can determine whether active

management yields returns that justify the costs associated with managing the funds (Henriksson, 1984).

factors and market conditions on fund performance (Matallín‐Sáez, 2006).

decisions, thereby minimizing dependence on anecdotal evidence or conjecture and promoting a systematic

approach to investing in mutual funds (Peykani et al., 2022).

In summary, performance evaluation serves as an essential instrument in the analysis of mutual funds,

providing valuable insights into returns, risk management, managerial expertise, and performance. This

ultimately facilitates informed investment decisions (Chang & Lewellen, 1984; Chen & Lin, 2006; Henriksson,

1984; Matallín‐Sáez, 2006; Peykani et al., 2022; Shukla & Trzcinka, 1994).

The Securities and Exchange Board of India (SEBI) has implemented a classification system for mutual funds

to enhance clarity and consistency in investment schemes. The categorization is outlined as follows.

cap, multi-cap, and sector funds, among others.

which allocate investments to other mutual fund schemes (Kaur & Kaushik, 2016; Paul et al., 2021).

These classifications assist investors in selecting mutual funds that align with their individual requirements,

risk tolerance, and investment objectives.

This study plans to examine the performance of the top five mutual funds in India in the equity, hybrid, and

debt categories over the last five years. Mutual funds are important in financial markets because they gather

money from many investors and invest it in various portfolios. To understand how these funds perform, we

need to look at real data because many factors affect their return. The research question is as follows: How do

funds perform in different categories, such as equity, hybrid, and debt, in India’s changing mutual fund

Numerous researchers have studied various aspects of mutual fund schemes, including equity, hybrid, and

debt, in the Indian context. For the present study, some of the most pertinent and recent articles were reviewed,

as outlined below.

Sharma and Joshi (2021) analyzed the performance of debt, equity, and hybrid mutual fund schemes in India

(2016-2020) using Standard Deviation, Beta, Sharpe Ratio, Jensen's Alpha, and Treynor Ratio. The findings

show that debt mutual funds outperform equity and hybrid funds in CRISIL rankings, indicating better

stability. Most funds show average or below-average performance, with some achieving superior risk-adjusted

returns. The study demonstrates that debt funds carry lower risk, while equity and hybrid funds show higher

volatility with the potential for greater returns, making them suitable for risk-tolerant investors. This research

helps investors make informed decisions by explaining the risk-return dynamics across fund categories.

Jesrani (2023) analyzed the performance of aggressive and conservative hybrid mutual funds in India from

January 2020 to December 2023. Using NAVs and fact sheets, the study evaluated funds based on returns,

standard deviation, beta, Sharpe ratio, Jensen's alpha, and Treynor's ratio. Among aggressive hybrid funds, the

ICICI Prudential Equity & Debt Fund showed the highest returns, while the Kotak Debt Hybrid Fund led the

conservative hybrid funds. This study emphasizes that investors should consider risk tolerance and past

performance metrics when making investment decisions aligned with their financial goals.

reports and financial databases. The findings show that equity schemes offer higher returns for higher risk. The

ICICI Prudential Large and Mid-Cap Fund showed the highest Sharpe ratio among large-cap funds, while the

HDFC Mid-Cap Opportunities Fund demonstrated strong performance among mid-caps. In small caps, HDFC

Small-Cap Fund showed strong metrics, while SBI Small-Cap Fund suited volatility-conscious investors. The

study concludes that mutual funds show better long-term growth potential than traditional investments, with

investors needing to consider both risk and return metrics when making decisions.

The choice of fund depends on individual financial goals and risk tolerance.

Vasani and Rachchhh (2020) analyzed top-rated equity, debt, and hybrid mutual fund schemes in India,

examining risk-return trade-offs for middle-class investors. They evaluated 4- and 5-star large-cap equity, long-

term debt, and conservative hybrid funds ranked by CRISIL, using data from valueresearch.com and

moneycontrol.com (2015-2019). The five-year returns were as follows: Axis Bluechip Fund - D (G) at 9.7%

(equity), IDFC Bond Fund- LTP - D (G) and Nippon Income Fund - Direct (G) both at 10% (debt), and CR

Income Saver Fund - D (G) at 8.20% (hybrid). Debt funds outperformed equity, which was attributed to data

collection during the COVID-19 pandemic. The study suggests debt for short-term, equity for long-term, and

hybrid for moderate long-term goals, noting that equity risk decreases over time.

Meera and Venkataramaraju (2020) analyzed India's top five mutual funds' equity schemes, examining daily

Singh et al. (2024) looked at Indian Mutual Funds to give investors insights by checking 3-year and 5-year

returns. They studied past performance, strengths, and weaknesses and provided advice using existing data.

Key findings were as follows: In Equity Funds, Quant Small Cap Fund and Nippon India Small Cap Fund

hybrid, and debt funds during this period. Research on the best-performing funds is, however, limited. We

should study the top five funds in each category to determine why they perform well. We also need to consider

more than just returns. We should include other measures, such as the Sharpe ratio, Treynor ratio, and Jensen's

alpha. We need to study fund characteristics, such as size, expense ratio, and manager experience, to see how

they relate to top performance. Most studies focus on numbers and miss the strategies of top funds. There is

insufficient research on whether top funds continue to perform well over the years. We also need to examine

how different sectors contribute to returns. We should explore how investors think and make decisions

regarding top funds. Most studies have examined past performance and have not predicted future performance.

Filling these gaps will help us better understand mutual fund performance.

mutual fund market and finds good management practices that others can use (Grinblatt & Titman, 1993;

Kothari & Warner, 2001). For benchmarking, this study helps set performance standards for other mutual funds

(Kothari & Warner, 2001). For risk management, the study shows how top funds handle risk and maintain

performance in different market conditions, helping cautious investors make informed decisions (Bauer et al.,

2006). For policy-making, the study can point out areas that need oversight to keep the market fair (Shukla &

Trzcinka, 1994). To compare funds, this study examines different types of mutual funds to help investors

choose the right ones for their risk levels and goals (Indro et al., 1999; Jiang et al., 2023). This analysis makes

the market clearer and more efficient, thereby helping the financial sector grow.

Strong Performance of Quant Mutual Fund: The fund house Quant is represented three times among the top

quantitative and aggressive investment approaches. Important Note: The historical performance of a fund

could also result in significant underperformance in different market conditions.