Top 20 High Return Mutual Funds – High Alpha and Low Beta

Top 20 High Return Mutual Funds - High Alpha and Low BetaTop 20 High Return Mutual Funds – High Alpha and Low Beta


Mutual Funds are down month on month in the last 1-2 years. Many mutual fund investors are rethinking whether they made any wrong decision of investing in mutual funds. Many of us might be thinking that if stock markets are going to bounce back, which are the best mutual funds to invest? We have filtered 20 Mutual Funds that have High Alpha and low beta which would help you to earn high returns and less volatile compared to stock markets. Which are the Top 20 High Return Mutual Funds that have High Alpha and Low Beta to invest in India?

Also Read: Best SIP Plans to invest for 10 years

What are High Return Mutual Funds we are talking about here?


High Return Mutual Funds are those which are expected to perform well compared to its benchmark. E.g. if the benchmark is going to give 12% returns, these high return mutual funds are expected to perform well and give 12%+ returns.  For this we have chosen Alpha and Beta ratio this time.

What is Alpha Ratio in Mutual Funds?


Alpha is one of the key parameters that can provide the direction of a mutual fund scheme. In simple terms, Alpha is the soundness of a mutual fund scheme. Alpha in MF is a measure of a mutual fund performance on a risk-adjusted basis. This concept considers the volatility of the mutual fund and compares its risk-adjusted performance to a benchmark index of the fund. The excess return of the mutual fund of the return of the benchmark index is its alpha. Alpha is often considered to represent the value that a mutual fund portfolio manager adds or subtracts from a fund portfolio’s return.

An alpha of 1 means the mutual fund has outperformed its benchmark index by 1%. Correspondingly, an alpha of -1.0 would indicate an under-performance of 1%.  

If you are mutual fund investor, you should always look for mutual fund schemes that has positive alpha (i.e. Alpha > 0). If a mutual scheme benchmark has provided 12% returns, your mutual fund would provide more than 12% returns.

What is Beta Ratio in Mutual Funds?


Beta in mutual funds is a measure of the volatility, of a mutual fund compared to the market as a whole. Beta in a mutual fund is calculated using regression analysis and it represents the tendency of an investment’s return to respond to movements in the market. The market beta is 1.0.

A mutual fund beta of 1.0 indicates that the investment’s price will move in line with the market. A beta of less than 1.0 indicates that the mutual fund scheme will be less volatile than the market. Correspondingly, a beta of more than 1.0 indicates that the mutual fund scheme will be more volatile than the market.

One should always invest in a mutual fund scheme that has beta of < 1.0. As an example, if a mutual fund scheme beta is 0.80,  means this is 20% (1-0.8) less volatile than the market.

Understanding more about Alpha and Beta Ratios would help to utilize these ratios in better way. 

How we picked 20 High Return Mutual Funds that have High Alpha and Low Beta?


1) We have considered all equity mutual funds in the last 10 year irrespective of the performance.

2) We have filtered mutual funds that have high beta of > 1 (high returns compared to benchmark).

3) We have further filtered mutual funds that have low beta of < 1 (Less volatile).

4) We have considered all mutual funds, i.e. even funds that were launched in < 5 years.

Top 20 High Return Mutual Funds – High Alpha and Low Beta


When we completed our analysis, we found 20 mutual fund schemes that have high alpha and low beta and here is the quick list.

i) 1 – Largecap Mutual Fund

ii) 1 – Largecap & Midcap Fund

iii) 1 – Midcap Fund

iv) 3 – Multicap mutual funds

v) 5 – Small cap mutual funds

vi) 7 – Value mutual funds

vii) 1 – ELSS Mutual Fund

#1 – High Return Mutual Funds from Large Cap segment


There is only one mutual fund in this segment, which is an Axis Blue Chip Fund.

This fund alpha is 1.67 which indicates that it can outperform benchmark with 1.67% higher returns.

This fund beta is 0.86. It means that it is less volatile compared to stock market fluctuations.

Here is the performance of the mutual fund scheme in the last 3 months to 10 year period.

High Return Mutual Funds Largecap Fund Category

This is one of the best bluechip mutual funds recommended by us last year

#2 – High Return Mutual Funds from Large Cap + Midcap segment


There is only one mutual fund in this segment, which is an Mirae Asset Emerging Bluechip Fund.

This fund alpha is 3.02 which indicates that it can outperform benchmark with 3.02% higher returns.

This fund beta is 1.02. It means that fund volatility is little higher compared to stock market volatility.

Here is the performance of the mutual fund scheme in the last 3 months to 10 year period.

High Return Mutual Funds Largecap-Midcap Fund Category

#3 – High Return Mutual Funds from Midcap Segment


There is only one mutual fund in this segment, which is an Axis Midcap Fund.

This fund alpha is 4.87 which indicates that it can outperform benchmark with 4.87% higher returns.

This fund beta is 0.73. It means that it is less volatile compared to stock market fluctuations.

Here is the performance of the mutual fund scheme in the last 3 months to 10 year period.

High Return Mutual Funds Midcap Fund Category

#4 – High Return Mutual Funds from Multicap Segment


There are 3 Multicap mutual funds that have high alpha and low beta.

These 3 funds have an alpha between 1.25 to 3.49 which indicates that these can outperform benchmark with 1.25% to 3.49% higher returns.

Beta of these 3 mutual funds is in between 0.56 to 0.99. It means these mutual funds are less volatile compared to stock market fluctuations.

Here is the performance of these mutual fund schemes in the last 3 months to 10 year period.

High Return Mutual Funds Multicap Category

# 5 – High Return Mutual Funds from Smallcap Segment


There are 5 small cap mutual funds that have high alpha and low beta.

These 5 funds have an alpha between 5.48 to 9.39 which indicates that these can outperform benchmark with 5.48% to 9.39% higher returns.

Beta of these 5 mutual funds is in between 0.60 to 0.91. It means these mutual funds are less volatile compared to stock market fluctuations.

Here is the performance of these mutual fund schemes in the last 3 months to 10 year period.

High Return Mutual Funds Smallcap Segment

# 6 – High Return Mutual Funds from Value Funds Segment


There are 8 value mutual funds that have high alpha and low beta.

These 8 funds have an alpha between 4.9 to 7.93 which indicates that these can outperform benchmark with 4.93% to 7.93% higher returns.

Beta of these 3 mutual funds is in between 0.43 to 0.64. It means these mutual funds are less volatile compared to stock market fluctuations.

Here is the performance of these mutual fund schemes in the last 3 months to 10 year period.

High Return Mutual Funds ValueFunds Category

We have recommended most of these funds as Top Value Mutual Funds to invest during last year.

#7 – High Return Mutual Funds from ELSS Tax Saving segment


There is only one mutual fund in this segment, which is an Mirae Asset Tax Saver Fund.

This fund alpha is 4.86 which indicates that it can outperform benchmark with 4.86% higher returns.

This fund beta is 0.96. It means that fund volatility is little higher compared to stock market volatility.

Here is the performance of the mutual fund scheme in the last 3 months to 10 year period.

High Return Mutual Funds ELSS Tax Saving Segment

List of Top 20 High Return Mutual Funds with Alpha and Beta Details


Top 20 High Return Mutual Funds - High alpha low Beta

Should you invest in High alpha and Low Beta Mutual Funds?


Though High Alpha indicates that these can provide high returns in mutual funds and low beta provides less risk compared to the stock market, these have limitations too. The accuracy of Beta (which depends on other risk ratio called R-Squared) and accuracy of Alpha (which depends on Beta) can always be questionable. In some cases, these can provide incorrect data with various influencing factors. The majority of the funds indicated here are already recommended by us earlier. If you are investing in those funds, you can continue to invest. However, don’t go overboard and invest in one segment of mutual funds (i.e.like small cap or value mutual funds). Invest in diversified portfolio that has largecap, midcap, smallcap, multicap and balanced funds.

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Suresh KP

Top 20 High Return Mutual Funds – High Alpha and Low Beta

4 comments

  • Avik Sen

    I am investing Rs 2000 as SIP in ICICI Pru Value Discovery Fund-Grwth-Direct for last two years. recently its performance is not good. Shall I continue this SIP? Please advise.

  • Karan

    Hi Suresh,

    So by seeing the current market condition do you recommend me to switch any of these below funds which I currently have or leave it as it is ?

    1. HDFC prudence

    2. ICICI value discovery fund

    3. Birla life frontline equity

    4. ICICI prudential focused bluechip equity fund

    5. Reliance equity opportunity fund

    6. HDFC Short Term Debt Fund – Direct Plan- Growth Option

    Please advice..

  • Soumyajit Behera

    It will be a useful tool for the new investors who wants to invest in the mutual funds.

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