If you’ve been tracking your mutual fund portfolio over the last few months, you’ve probably noticed something — a handful of funds have quietly turned in returns that most category averages simply couldn’t match. We’re talking 18% to as high as 25%+ in just one year. This list excludes global funds that are outperforming for some time.
Before you get excited (or before you start wondering why your own funds didn’t do this well), let’s look at this data properly. Because one great year doesn’t automatically make a fund “the best” — and that’s exactly what we’ll unpack below.
Explore 12 Mutual Funds with Positive Returns in Every Calendar Year Since 2021 (129%+ Returns in 5 Years).
Why These Funds Outperformed in the Last 12 Months
The common thread across this list is sector concentration. Auto, pharma/healthcare, and a few thematic and momentum-driven strategies had a strong run over the last year, and funds with heavy exposure to these themes rode that wave. A couple of children’s/hybrid funds and IPO-focused funds also make an appearance, showing that outperformance wasn’t limited to just one corner of the market.
This is worth remembering: strong 1-year numbers are often a function of which sector was in favour, not necessarily the fund manager doing something extraordinary. Keep that context in mind as you go through the table.
Top 10 Mutual Funds with 18–25% 1-Year Returns (July 2026)
Here’s the full list, ranked by 1-year returns:
| Fund Name | 1 Yr Return (%) | 3 Yr CAGR (%) | 5 Yr CAGR (%) | 10 Yr CAGR (%) |
|---|---|---|---|---|
| SBI Automotive Opportunities Fund | 25.5 | — | — | — |
| TRUSTMF Small Cap Fund | 25.4 | — | — | — |
| Kotak MNC Fund | 25.2 | — | — | — |
| Motilal Oswal Active Momentum Fund | 23.2 | — | — | — |
| HDFC Pharma And Healthcare Fund | 22.4 | — | — | — |
| Kotak Healthcare Fund | 20.4 | — | — | — |
| WhiteOak Capital Pharma and Healthcare Fund | 19.5 | — | — | — |
| Edelweiss Recently Listed IPO Fund | 19.5 | 20.5 | 14.8 | — |
| SBI Children’s Fund – Investment Plan | 18.9 | 23.5 | 24.6 | — |
| Quant BFSI Fund | 18.2 | 27.5 | — | — |
Note: “–” indicates the fund doesn’t have a long enough track record for that time period, not that the data is unavailable.
Explore more – 10 Mutual Funds That Generated 27% to 42% CAGR in the Last 3 Years.
Category-Wise Breakdown
Sectoral & Thematic Funds dominate this list — and that’s not a coincidence.
- Auto theme: SBI Automotive Opportunities Fund tops the chart at 25.5%, riding the auto sector’s strong run.
- Pharma & Healthcare theme: Three funds make the cut here — HDFC Pharma And Healthcare Fund, Kotak Healthcare Fund, and WhiteOak Capital Pharma and Healthcare Fund. When one healthcare fund does well, you’ll usually see its peers close behind, and that’s exactly the pattern here.
- BFSI theme: Quant BFSI Fund rounds out the sectoral funds, and interestingly, its 3-year return (27.5%) is actually higher than its 1-year number — a sign this one has been consistent, not just a recent flash.
Small Cap: TRUSTMF Small Cap Fund is the only pure small-cap entrant, and it’s sitting right at the top with 25.4%.
MNC/Large Cap Themed: Kotak MNC Fund brings a different flavour — multinational-focused large caps that aren’t as volatile as small caps but still delivered a 25.2% return.
Momentum Strategy: Motilal Oswal Active Momentum Fund represents the factor-investing category, where the fund actively rotates into stocks showing price momentum.
Hybrid/Goal-Based: SBI Children’s Fund – Investment Plan is the odd one out on this list — it’s not a pure equity sectoral bet, yet it’s delivered strong and consistent numbers across 1, 3, and 5 years (18.9%, 23.5%, 24.6%).
IPO-Focused: Edelweiss Recently Listed IPO Fund invests in companies that have recently listed, and its numbers across timeframes (19.5% / 20.5% / 14.8%) show a fund that’s had a good run but with some cooling off over the 5-year window.
Read our analysis – 9 High Return Mutual Funds with Over 25% CAGR in the Last 5 Years
1-Year Returns vs 3-Year and 5-Year Returns — What It Really Tells You
This is the section most people skip, and it’s the one that matters most.
Look closely at the table again. Most of the funds on this list — 7 out of 10 — don’t even have a 3-year track record to show yet. That’s not a red flag by itself, but it does mean you’re looking at funds that are either fairly new or have only recently built up this kind of performance history. There’s simply no way to judge how they behaved through a full market cycle.
Now compare that to the three funds that do have longer histories:
- Quant BFSI Fund — 3-year return of 27.5% is higher than its 1-year return of 18.2%. This tells you the fund has actually been performing well for a while now, and the last year wasn’t an isolated spike.
- SBI Children’s Fund — Returns have stayed strong and fairly close across 1, 3, and 5 years. That kind of consistency is genuinely harder to find than a single good year.
- Edelweiss Recently Listed IPO Fund — Here you see some deceleration — 5-year return (14.8%) is meaningfully lower than the 1 and 3-year numbers. This could reflect how the IPO market itself has cycled through highs and lows.
The takeaway: don’t let a single blockbuster year decide your fund choice. If a fund has a longer track record available, always check it before assuming this is the “new star performer.”
Risk Factors to Know Before Comparing These Funds
A few things worth flagging honestly:
- Sector concentration = higher volatility. Auto, pharma, and BFSI-focused funds move in sync with their sector’s fortunes. When the sector turns, these funds can fall just as sharply as they rose.
- Small cap funds carry inherently higher risk. TRUSTMF Small Cap Fund’s 25.4% looks great today, but small caps are also the most volatile category in any market correction.
- Momentum strategies can reverse quickly. Funds like Motilal Oswal Active Momentum Fund are designed to chase what’s working right now — which also means they can underperform fast when market leadership shifts.
- Newer funds have unproven downside behaviour. Several funds on this list simply haven’t been tested through a bear market yet, since they don’t have 3, 5, or 10-year numbers.
None of this means these are “bad” funds — it just means the same feature that drove strong returns (sector or theme concentration) is also what adds risk.
Explore this too – 11 High Return Mutual Funds with Over 20% CAGR in the Last 10 Years
How to Read Mutual Fund Returns the Right Way
A quick refresher, because this applies to every “top performer” list you’ll ever see, not just this one:
- 1-year returns are a snapshot, not a trend. They tell you what happened in a specific window, often driven by which sector was hot.
- Longer track records reduce guesswork. A fund with consistent 5 or 10-year numbers has actually been tested through ups and downs — a 1-year number alone hasn’t been.
- Category context matters. Comparing a sectoral fund’s return to a diversified flexi-cap fund’s return isn’t really an apples-to-apples comparison — they carry very different risk profiles.
- Past returns don’t predict future returns. This is standard, but worth repeating every single time — especially when looking at a “23% in one year” headline.
FAQs
Q1: Are 18-25% returns in mutual funds sustainable year after year? Not typically. Returns of this magnitude are usually tied to a specific sector or theme being in favour during that period. Sustaining this consistently across multiple years is rare, which is why checking 3, 5, and 10-year data (where available) matters.
Q2: Is a fund with only a 1-year track record safe to consider? A short track record simply means there isn’t enough history to judge how the fund performs across market cycles — both up and down. It doesn’t automatically make a fund unsafe, but it does mean there’s more uncertainty involved.
Q3: Why do sectoral and thematic funds appear so often in “top return” lists? Because they’re concentrated bets. When a specific sector rallies, funds focused on that sector will naturally show outsized returns compared to diversified funds. The flip side is equally true during a sector downturn.
Q4: Should 1-year returns be the only factor while comparing mutual funds? No. Returns across multiple timeframes, expense ratio, fund category, and how the fund has handled market corrections in the past are all part of a fuller picture.
Q5: How often should this list be updated? Fund performance changes with every NAV update, so lists like this are best treated as a snapshot for the stated month — in this case, July 2026 — rather than a permanent ranking.
Data as of July 2026. Returns shown are point-to-point and can vary based on the date of calculation.
Disclaimer: This article is intended for informational and educational purposes only and does not constitute investment advice or a recommendation to buy, sell, or hold any mutual fund scheme.
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