Last Gandhi Jayanthi, we looked at 10 mutual funds that delivered 32% to 94% returns in a single year. That list was dominated by international fund of funds – gold mining, US technology, Chinese tech and Taiwan semiconductors. One year later, the picture looks completely different. Since the last Gandhi Jayanthi (2-Oct-2025), the top 10 equity mutual funds have delivered 21% to 29% returns excl global funds.
This year’s toppers come from small caps, pharma and healthcare, defence and momentum strategies. Five of the ten funds are from the healthcare space alone. Many of these funds are also relatively new, with less than 3 years of track record. In this article, we will look at these 10 funds, their investment objective, past performance across time periods, the investor profile they may suit, and the risks involved.
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How We Identified These Mutual Funds
We followed the same approach as last year so that the two lists can be compared fairly.
- We considered all equity mutual funds, including sector and thematic funds, and looked at direct plans only. We have excluded global / international funds as though they have outperformed, there are restrictions to invest in such funds.
- We evaluated 1-year returns from 2-Oct-2025 to 2-Oct-2026.
- The top 10 funds were shortlisted purely on their 1-year returns during this period.
- For context, we have also shown 3-year, 5-year and 10-year annualised returns wherever the fund has that much history.
List of Top 10 Mutual Funds Since Last Gandhi Jayanthi
| S No |
Fund Name |
Category | 1-Yr Return (%) | 3-Yr CAGR (%) | 5-Yr CAGR (%) | 10-Yr CAGR (%) |
|---|---|---|---|---|---|---|
| 1 | Bank of India Small Cap Fund | Small Cap | 29.3 | 21.6 | 20.0 | NA |
| 2 | TRUSTMF Small Cap Fund | Small Cap | 29.1 | NA | NA | NA |
| 3 | Kotak Healthcare Fund | Sectoral – Healthcare | 28.8 | NA | NA | NA |
| 4 | HDFC Pharma and Healthcare Fund | Sectoral – Healthcare | 26.6 | NA | NA | NA |
| 5 | PGIM India Healthcare Fund | Sectoral – Healthcare | 25.7 | NA | NA | NA |
| 6 | Motilal Oswal Active Momentum Fund | Thematic – Momentum | 25.3 | NA | NA | NA |
| 7 | Motilal Oswal Focused Fund | Focused | 24.7 | 14.3 | 10.4 | 13.1 |
| 8 | HDFC Defence Fund | Thematic – Defence | 22.6 | 36.1 | NA | NA |
| 9 | WhiteOak Capital Pharma and Healthcare Fund | Sectoral – Healthcare | 22.1 | NA | NA | NA |
| 10 | ICICI Prudential Nifty Pharma Index Fund | Index – Pharma | 21.2 | 19.5 | NA | NA |
Data as on 2-Oct-2026. Direct plans. NA = fund does not have a track record for that period. Past performance may or may not be sustained in future.
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What Stands Out in This Year’s List
Healthcare Has Taken Over the List
Half of the top 10 funds – Kotak, HDFC, PGIM, WhiteOak and the ICICI Prudential Nifty Pharma Index Fund – are pharma and healthcare funds. When one sector occupies 5 out of 10 slots, it tells us that the returns came largely from the sector and not just from individual fund manager skill.
Small Caps Are Back at the Top
Bank of India Small Cap Fund and TRUSTMF Small Cap Fund occupy the top two spots with nearly identical returns of 29.3% and 29.1%. Bank of India Small Cap Fund is also the only fund in this list with a 5-year record of 20% annualised returns.
Many Funds Have a Short Track Record
Six of the ten funds do not have 3-year return data. Only Motilal Oswal Focused Fund has a 10-year record. A strong first year is encouraging, but it is not enough to judge how a fund behaves across a full market cycle.
There is not even single largecap mutual fund in this list. However, you can check out our Tool on Largecap Mutual Funds List based on last 3 and 5 years rolling returns.
Deep Dive into the 10 Top Performing Funds
1. Bank of India Small Cap Fund
Fund Objective: Invests predominantly in small cap companies with the aim of long-term capital appreciation.
Annualised Returns:
- 1 Year: 29.3%
- 3 Years: 21.6%
- 5 Years: 20.0%
Investor Profile It May Suit: Investors with a high risk appetite and an investment horizon of 7 years or more, who can stay invested through sharp falls.
Risk Factors:
- High volatility and deep drawdowns during market corrections
- Lower liquidity in small cap stocks
- Smaller AUM fund house compared to large AMCs
This is the only fund in the list that has delivered 20%+ annualised returns across 1, 3 and 5 years. You can also compare how small cap funds have performed on a rolling returns basis in our Small Cap Rolling Returns tool.
2. TRUSTMF Small Cap Fund
Fund Objective: Invests mainly in small cap companies, following the fund house’s research-driven stock selection process.
Annualised Returns:
- 1 Year: 29.1%
Investor Profile It May Suit: Aggressive investors who are comfortable with a new fund and a small cap allocation for the long term.
Risk Factors:
- Limited track record – performance across a full market cycle is yet to be seen
- Small cap volatility and liquidity risk
- Newer fund house with a smaller scheme range
3. Kotak Healthcare Fund
Fund Objective: Invests in companies from the pharma, hospitals, diagnostics and broader healthcare sectors.
Annualised Returns:
- 1 Year: 28.8%
Investor Profile It May Suit: Investors who already have a diversified core portfolio and want a small satellite exposure to healthcare.
Risk Factors:
- Single-sector concentration
- US FDA regulatory actions affecting pharma exporters
- Drug price control and government policy changes in India
4. HDFC Pharma and Healthcare Fund
Fund Objective: Invests in pharma and healthcare companies across market capitalisations.
Annualised Returns:
- 1 Year: 26.6%
Investor Profile It May Suit: Investors looking for sectoral exposure from a large fund house, as a small part of the overall portfolio.
Risk Factors:
- Sector concentration
- Currency movements impacting export-oriented pharma companies
- Regulatory and pricing risks
5. PGIM India Healthcare Fund
Fund Objective: Focuses on companies engaged in healthcare products and services, including pharma, hospitals and healthcare-related businesses.
Annualised Returns:
- 1 Year: 25.7%
Investor Profile It May Suit: Investors bullish on India’s healthcare spending story who can hold a sectoral fund through its cycles.
Risk Factors:
- Short track record
- Sector-specific downturns
- Valuation risk after a strong run in healthcare stocks
6. Motilal Oswal Active Momentum Fund
Fund Objective: Follows a momentum strategy, investing in stocks that have shown strong recent price trends and rotating the portfolio as trends change.
Annualised Returns:
- 1 Year: 25.3%
Investor Profile It May Suit: Investors who understand factor-based investing and can tolerate higher portfolio churn.
Risk Factors:
- Momentum strategies can underperform sharply when market trends reverse
- High portfolio turnover
- Limited track record
7. Motilal Oswal Focused Fund
Fund Objective: Invests in a concentrated portfolio of up to 30 stocks across market capitalisations.
Annualised Returns:
- 1 Year: 24.7%
- 3 Years: 14.3%
- 5 Years: 10.4%
- 10 Years: 13.1%
Investor Profile It May Suit: Investors comfortable with a concentrated portfolio and an investment horizon of 5 years or more.
Risk Factors:
- Concentration risk – a few stocks can drive overall performance
- Inconsistent performance across periods
This fund is a good example of why one year’s return should not be seen in isolation. The 1-year return is strong, but the 5-year return of 10.4% is much lower. It is also the only fund in the list with a 10-year record.
8. HDFC Defence Fund
Fund Objective: Invests in defence and defence-allied companies, including aerospace, shipbuilding and explosives manufacturers.
Annualised Returns:
- 1 Year: 22.6%
- 3 Years: 36.1%
Investor Profile It May Suit: Investors with a high risk appetite who want exposure to the defence manufacturing theme.
Risk Factors:
- Dependence on government orders and policy
- High valuations in defence stocks
- Narrow investment universe
Interestingly, this is the only fund in the list where the 1-year return is much lower than the 3-year return. The defence theme had a huge run earlier, and returns have cooled in the last one year.
9. WhiteOak Capital Pharma and Healthcare Fund
Fund Objective: Invests in pharma and healthcare companies using the fund house’s bottom-up stock selection approach.
Annualised Returns:
- 1 Year: 22.1%
Investor Profile It May Suit: Investors who want healthcare exposure and are comfortable with a relatively new fund.
Risk Factors:
- Short track record
- Sector concentration
- Regulatory risks in domestic and export markets
10. ICICI Prudential Nifty Pharma Index Fund
Fund Objective: Passively tracks the Nifty Pharma Index, subject to tracking error.
Annualised Returns:
- 1 Year: 21.2%
- 3 Years: 19.5%
Investor Profile It May Suit: Investors who want low-cost, passive exposure to large pharma companies.
Risk Factors:
- Concentration in a few large pharma stocks
- Tracking error
- No active management during sector downturns
This is the only passive fund in the list. It shows that a simple low-cost index fund could deliver returns close to the actively managed healthcare funds over the last year.
Things to Check Before Comparing Further
- Track record: A 1-year return from a fund launched recently does not tell you how it handles a market fall. Look for 3-year and 5-year data where available.
- Rolling returns: Point-to-point returns depend heavily on the start and end dates. Rolling returns give a better picture of consistency. As an example check out our Top Midcap Mutual Funds based on live rolling returns. Currently, the avg 3 yrs and 5 yrs CAGR returns are between 20% to 25%.
- Sector concentration: Healthcare, defence and momentum are themes. They can go out of favour for several years.
- Portfolio overlap: If you already hold diversified equity funds, check how much of these stocks you already own.
- Expense ratio: Compare the expense ratio of active sectoral funds with the passive index option in the same sector.
- Exit load and taxation: Equity fund gains held for less than 12 months are taxed as short-term capital gains.
Conclusion
Since the last Gandhi Jayanthi, select domestic equity mutual funds delivered returns ranging from 21% to 29%. Small caps and healthcare led the way, while defence and momentum strategies also found a place.
The biggest lesson from comparing both years is that sector and thematic leadership keeps rotating. Last year’s toppers are missing this year, and this year’s toppers may not repeat next year. Anyone looking at these funds should first understand the risks, check whether they fit their risk appetite and financial goals, and keep diversification across asset classes in mind.
Frequently Asked Questions
Which mutual fund gave the highest return since Gandhi Jayanthi?
Bank of India Small Cap Fund delivered the highest 1-year return of 29.3% between 2-Oct-2025 and 2-Oct-2026 among the equity funds we compared. TRUSTMF Small Cap Fund was a close second at 29.1%.
Why are so many healthcare funds in the top 10 list?
Five of the ten funds are pharma and healthcare funds, which shows that the sector as a whole performed well during this period. Sector performance is cyclical and can reverse, so past returns may not continue.
Are past 1-year returns a good basis to select a mutual fund?
One-year returns alone are not a reliable basis for any decision. Investors may look at longer-term returns, rolling returns, risk measures and portfolio construction, and consult a SEBI-registered investment adviser for personalised advice.
Disclaimer: This article is for educational and informational purposes only and compares historical performance data. It is not investment advice or a recommendation to buy, sell or hold any mutual fund. The author is not a SEBI-registered investment adviser. Mutual fund investments are subject to market risks; read all scheme-related documents carefully. Past performance may or may not be sustained in future. Please consult a SEBI-registered investment adviser before making any investment decision.
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