Before investing in a mutual fund scheme, investors tend to weigh a host of pros and cons. Some prioritise the reputation of a fund house, while others give preference to the fund's scheme category, for some investors — fund manager’s past performance is of paramount importance, while a few think otherwise.
Nevertheless, one key consideration that most investors give a significant importance to is the scheme’s historical returns.
Here, we take a look at the past compound annual growth rate (CAGR) returns delivered by small cap, mid cap and large cap mutual funds in the past five years.
As one can discern from the chart below, small and mid-cap mutual funds showed higher volatility in the short run, whereas large cap funds are more stable in terms of returns they delivered in the past five years.
The CAGR returns delivered by the small cap mutual funds move between a larger spectrum: 15.7 percent to 41.2 percent, during five and three years, respectively.
At the same time, CAGR returns given by mid cap mutual funds move between a smaller range i.e., between 13.56 percent to 31.51 percent during five and three years, respectively.
The large cap mutual funds, during this period, gave the minimum returns of 11.68 percent for five years, while the maximum returns stood at 22.93 percent for a three-year period.
| MF Category | 1-year returns (%) | 3-years returns (%) | 5-year returns (%) |
| Small Cap | 18.61 | 41.26 | 15.71 |
| Mid Cap | 16.60 | 31.51 | 13.56 |
| Large Cap | 12.24 | 22.93 | 11.68 |
(Source: MorningStar, data as on June 4)
It is perhaps because of the stability of returns delivered by large cap mutual funds that they have caught a fancy with the investors.
No wonder then these schemes are the most popular with 31 in number and total assets under management (AUMs) amounting to ₹2.44 lakh crore, shows the latest AMFI (Association of Mutual Funds in India) data as on April 30, 2023.
| Mutual fund category | No of schemes | Net AUMs ( ₹crore) |
| Small cap | 24 | 1,42,211 |
| Mid cap | 29 | 1,92,564 |
| Large Cap | 31 | 2,44,610 |
(Source: AMFI, data as on Apr 30, 2023)
Large cap funds are followed by mid cap funds which have 29 schemes with total AUMs of 1.92 lakh crore, whereas the least popular schemes belong to small cap mutual funds with total AUMs of ₹1.42 lakh crore.
It is interesting to note that despite delivering exceptional returns, small cap mutual funds have failed to woo the investors en masse. And no wonder then the schemes under this category have the lowest AUMs as compared to their larger peers.
After all, it is the volatility that counts too.
