Six consistent equity mutual funds of the decade to bet on

Which mutual funds to choose to invest in 2020? Well, a new year does not change the fundamental advice: always invest in consistently performing mutual funds. A consistent mutual fund scheme allows investors to ride through both the bull and the bear market with ease. A consistent scheme is expected to be less volatile than the market and their peers.

To offer you some handpicked consistent mutual fund schemes, ETMutualFunds.com sifted through the data to find a list of schemes that did consistently well in the last 10 years. Since these schemes have been consistent in their performance over a decade, investors can consider investing in them in the future as well.

Before moving forward, investors must understand that these schemes might not be suitable for you if your risk-taking ability does not match the risk involved in a particular category. For instance, small cap mutual funds are not suitable for all investors. Only sophisticated investors who understand the downside risk and volatility factor of small caps can look at them.

So, investors with some knowledge about mutual funds can choose the schemes from the list.

How we did it?
To take out the best equity mutual funds of the decade, we took out the five-year rolling returns, rolled on a daily basis for the last 10 years. To know more about rolling returns, you can read: Is 'rolling return' the best way to measure performance of mutual funds?
We have taken five years as that is the minimum time horizon recommended for investing in an equity fund.
After taking out the data, we filtered out schemes which have given average 5-year rolling returns of over 15% over the last 10 years. What does that mean?

To explain with an example, let us take an example of SBI Small Cap Fund. The scheme has had 1,294 five year periods in the last 10 years. The first 5-year period would be - 01-Jan-2010 to 31-Dec-2014, the second 5-year period would be 02-Jan-2010 to 01 Jan 2015, and so on. The average return of all these 1,294 five-year periods is the average rolling return of the scheme.

In these over 1,000 five-year periods, most schemes would have generated negative and/ or lower returns as well. So, to take out the strongest schemes, we removed those schemes which have in any of these five year periods, given less than 10% returns.

This gives us a list of 6 schemes. Take a look at the table:

5-year rolling returns, rolled on a daily basis over the last 10 years
Source: Ace MF

Investors can rely on these schemes given the fact that we have looked at a huge sample size thus the probability of a similar performance in the future can be expected.

Apart from these schemes, we have four more schemes which were launched after 2010 and have not completed 10 years but have performed exceptionally well and fulfill our performance criteria.

Here is the list:

5-year rolling returns, rolled on a daily basis over the last 10 years
Source: Ace MF