Performance Analysis of Top Five Equity, Hybrid, and Debt Mutual Funds in India: A Five-Year Study (2020-2025)

Abstract

This study analyzes the performance of the top five mutual funds in the equity, hybrid, and debt categories in 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 impact of quantitative and aggressive investment strategies. These findings emphasize the importance of understanding risk-return trade-offs, diversification, and aligning investments with individual financial goals and risk tolerance. This study provides valuable insights for investors, fund managers, and policymakers to navigate the Indian mutual fund landscape. However, it is crucial to consider that past performance does not guarantee future results, and a comprehensive investment approach should consider broader market and economic factors.