The one-year returns for equity-oriented mutual fund (MFs) schemes have largely mirrored the gains made in the secondary market.
However, schemes that invest in infrastructure (infra), small-cap, and public sector undertaking (PSU) banks have emerged standout performers, with gains in excess of 100 per cent in some cases.
Of the total 484 equity schemes, 353 have managed to beat the Sensex, reveals the data provided by Value Research.
Around 20 have delivered returns in excess of 90 per cent and six schemes have given returns of over 100 per cent in the past one year.
The S&P BSE Sensex Total Return Index (TRI) has given returns of 51 per cent in the last one year, ended October 29.
Kaustubh Belapurkar, director–manager research, Morningstar India, says, “The rally in Indian markets has been broad-based across market capitalisation in the past one year.
"This was unlike the period of 2018-19, when the rally was very narrow, led by a few top stocks.
"Typically, in markets such this, an active fund outperforms the benchmark since the rally is seen across different sectors.”
Three of the top 10 best-performing schemes are in the infra category.
“What has helped the segment over the past few years is the aggressive infra budget allocation by the government.
"This has given construction companies a good order book visibility and has helped scale up operations.
"On the private sector side, we have seen low fixed asset formation.
"As utilisation levels pick up, corporates will invest to build capacity,” said Ihab Dalwai, fund manager, ICICI Prudential Infra Fund.
Apart from infra, schemes such as commodities and emerging business funds are in the top 10 list.
ICICI Prudential Commodities Fund and L&T Emerging Business Fund have given returns of 125 per cent and 96 per cent, respectively, in the last one year.
Venugopal Manghat, head-equities at L&T MF, says over the past year, bottom-up stock-picking and active fund management have been rewarded well by the market.
“There are some sectors with strong tailwinds that have also contributed.
"Sticking to the theme and remaining patiently invested for earnings growth to unfold and the valuation to be rerated have helped in the performance,” added Manghat.
Exchange-traded funds linked to PSU banking stocks have among the best one-year returns.
The returns delivered by state-owned banks have surprised many.
While most investors prefer private banks over PSU banks, the former has been a big underperformer over a one-year period.
Ultra-low valuations, privatisation hopes, and optimism that the worst of the bad loan cycle could be behind have led to major rerating in PSU stocks.
Interestingly, despite the sharp upmove, several state-owned banks still continue to trade at a discount to their historical valuations.
In the small-cap category, Quant Small Cap, Kotak Small Cap, and Principal Small Cap feature in the top 10 performers list.
All three schemes would have nearly doubled your money.
In comparison, the S&P SmallCap TRI and S&P BSE MidCap TRI have gained 89 per cent and 71 per cent, respectively.
While the small-cap theme has played out well over the past one year, it could see higher volatility.
For instance, during the latest bout of correction in October, the small-cap indices came off nearly 10 per cent from their highs, even as large-caps fell only 3 per cent.
Several experts say the correction would be sharper in the broader markets if the sentiment turns negative.
Schemes lagging in terms of performance were in the emerging market category and gold fund.
Even pharmaceutical and health care funds as a theme have given returns in the range of 27-35 per cent in the past one year.
Market participants also say that investors looking to invest in small-cap or thematic funds at this point in time should have an investment horizon of at least five years and should be ready for some volatility in the portfolio.