If you are a mutual fund investor or planning to invest in mutual funds, then recent performance trends might surprise you. Some mutual fund schemes have delivered stellar returns of upto 20% in just the last 3 months. In fact, a few defence sector funds have even crossed 50% returns in this short period. In this article, we will deep dive into 8 mutual fund schemes that have delivered 3-month returns between 20% to 54%, understand their investment objectives, risks, and who should consider investing in them.
Earlier we wrote on 5 Mutual Fund Schemes with 5-Year Returns between 426% to 619% which can be useful to you.
What Are Mutual Funds?
Mutual funds pool money from several investors and invest in a diversified portfolio of stocks, bonds, or other securities. Professional fund managers manage these funds aiming to generate returns for investors. Mutual funds are suitable for investors looking for diversification and professional management of their investments.
Why Consider the Last 3 Months’ Performance?
The Indian stock markets experienced sharp corrections due to several macro events in the past few months. The major triggers included global economic concerns, inflationary pressures, interest rate hikes, and geopolitical tensions. Notably, the sudden India-Pakistan border tensions also led to market volatility. However, the markets have recently begun a recovery phase, especially in niche segments like defence and PSU sectors, which benefited immensely from budget allocations, defence modernization, and rising investor interest.
How Did We Filter These Mutual Funds?
- We considered all equity mutual funds, including thematic, sectoral, and global funds.
- We filtered mutual funds that generated the highest returns in the last 3 months.
- From this list, we further filtered funds that delivered over 20% returns.
- As a result, we identified 8 mutual fund schemes that generated returns between 20% and 54% in the last 3 months. Earlier write about Which Mutual Funds can get 30% CAGR returns in the last 5 years, however here we are talking about such high returns in just 3 months.
- Data is as of 18-May-25 from Value Research Online.
8 Mutual Fund Schemes with 3 Months Returns Between 20% to 54%
Let us look at the Top 8 mutual funds with 3-month returns ranging from 20% to 54%:
| Mutual Fund Scheme | 3 Months Return (%) |
|---|---|
| Groww Nifty India Defence ETF FoF | 53.8% |
| Motilal Oswal Nifty India Defence Index Fund | 53.2% |
| Aditya Birla Sun Life Nifty India Defence Index Fund | 52.9% |
| HDFC Defence Fund | 38.4% |
| Tata Nifty Capital Markets Index Fund | 25.3% |
| Motilal Oswal Nifty Capital Market Index Fund | 25.2% |
| Invesco India PSU Equity Fund | 22.3% |
| SBI Energy Opportunities Fund | 20.0% |
Deep Dive into 8 Mutual Fund Schemes with 3 Months Returns Between 20% to 54%
#1 – Groww Nifty India Defence ETF FoF
- Category: Sectoral/Thematic – Defence
- Objective: Invests in units of Nifty India Defence ETF, which comprises companies involved in defence and related sectors.
- 3 Months Return: 53.8%
- 1 Year Return: NA
- Annualised Returns (3Y/5Y/10Y): NA
- Risks of Investing:
- High volatility due to concentration in the defence sector
- Sensitive to government policies and geopolitical developments
- Limited diversification increases sector-specific risks
- Who Can Invest: Suitable for high-risk investors with a strong belief in the defence theme and a long-term horizon.
#2 – Motilal Oswal Nifty India Defence Index Fund
- Category: Index Fund – Sectoral
- Objective: Replicates performance of the Nifty India Defence Index.
- 3 Months Return: 53.2%
- 1 Year Return: NA
- Annualised Returns (3Y/5Y/10Y): NA
- Risks of Investing:
- Performance tied to defence sector momentum
- Vulnerable to sudden market or political disruptions
- Lack of sector rotation flexibility
- Who Can Invest: Sector enthusiasts, aggressive investors seeking thematic exposure.
#3 – Aditya Birla Sun Life Nifty India Defence Index Fund
- Category: Index Fund – Sectoral
- Objective: Tracks Nifty India Defence Index.
- 3 Months Return: 52.9%
- 1 Year Return: NA
- Annualised Returns (3Y/5Y/10Y): NA
- Risks of Investing:
- Overexposure to a single sector
- Can underperform in broad market rallies where other sectors lead
- Performance can drop if defence allocations reduce
- Who Can Invest: Investors who understand sector rotation and can handle high short-term volatility.
#4 – HDFC Defence Fund
- Category: Sectoral/Thematic – Defence
- Objective: Invests in defence and allied sectors aiming long-term capital appreciation.
- 3 Months Return: 38.4%
- 1 Year Return: 22.7%
- Annualised Returns (3Y/5Y/10Y): NA
- Risks of Investing:
- Thematic exposure leads to high risk in the short term
- Limited historical performance due to recent launch
- Market corrections can severely impact returns
- Who Can Invest: Long-term investors looking to ride India’s defence growth story.
We write previous about CRISIL 5 Star Rated Mutual Funds with 30% CAGR Returns in last 6 years article which investors can read.
#5 – Tata Nifty Capital Markets Index Fund
- Category: Index Fund – Financial Services
- Objective: Replicates Nifty Financial Services Index which includes banks, insurance and NBFCs.
- 3 Months Return: 25.3%
- 1 Year Return: NA
- Annualised Returns (3Y/5Y/10Y): NA
- Risks of Investing:
- Sensitive to interest rate changes and monetary policy
- Financial crises can impact entire portfolio
- Performance can lag during economic downturns
- Who Can Invest: Investors seeking exposure to India’s growing financial sector.
#6 – Motilal Oswal Nifty Capital Market Index Fund
- Category: Index Fund – Financial Services
- Objective: Mirrors Nifty Financial Services Index.
- 3 Months Return: 25.2%
- 1 Year Return: NA
- Annualised Returns (3Y/5Y/10Y): NA
- Risks of Investing:
- Impacted by macroeconomic policies, especially those from RBI
- May face volatility during banking or NBFC crises
- Limited to financial sector performance only
- Who Can Invest: Suitable for medium to long-term investors looking for diversified financial exposure.
#7 – Invesco India PSU Equity Fund
- Category: Equity – Sectoral (PSU)
- Objective: Invests in equities of Public Sector Undertakings across sectors.
- 3 Months Return: 22.3%
- 1 Year Return: 5.5%
- Annualised Returns:
- 3Y – 37.9%
- 5Y – 18.6%
- 10Y – 37.9%
- Risks of Investing:
- Heavily influenced by government policies and disinvestment plans
- Political risks and regulatory changes can impact performance
- Cyclical sector performance may cause long-term stagnation
- Who Can Invest: Investors who believe in the PSU growth turnaround and can handle volatility.
Earlier we also wrote about article on 10 Mutual Fund Schemes with 10-Year Returns Between 464% and 646% which can be helpful to you.
#8 – SBI Energy Opportunities Fund
- Category: Sectoral/Thematic – Energy
- Objective: Invests in energy and energy-related businesses.
- 3 Months Return: 20.0%
- 1 Year Return: 0.6%
- Annualised Returns (3Y/5Y/10Y): NA
- Risks of Investing:
- High dependency on crude oil prices and global energy cycles
- Regulatory risks and climate-related policies can affect growth
- Exposure to cyclical and capital-intensive businesses
- Who Can Invest: Investors bullish on energy sector revival, with long-term goals.
Conclusion: The past three months have seen certain sectors outperform the broader market significantly, especially defence and capital market themes. While such high returns may seem attractive, they come with higher risk due to sector concentration. These funds can be a part of a satellite portfolio for aggressive investors, but should not form the core of one’s investment strategy. Your core investment strategy should be built based on your financial goals, risk appetite and tenure of investment.
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very good article, I appreciate. I already invested in Motilal oswal defence index fund.
very nicely categorized.
thank you verymuch.