India’s top performing mutual fund schemes in May 2025

2 Jun 2025 , 11:12 AM

FPIS TURN NET BUYERS IN EQUITY AND DEBT IN MAY 2025

For the month of May 2025, FPIs were net buyers overall to the tune of ₹30,950 Crore in Indian markets. This included ₹19,860 Crore of buying in equities and ₹11,090 Crore of buying in debt. Debt buying was triggered by lower fiscal deficit, rate cut hopes in June, and government relaxing FPI debt investment norms. In May 2025, Sensex rallied +1.51%, Nifty 50 rallied by +1.71%, Nifty Mid-Cap surged +6.09%, and Nifty Small Cap also closed +8.72% higher. The action has clearly shifted to alpha hunting in smaller stocks in May 2025. This outperformance by smaller stocks is reflected in the superior performance of multi-cap and flexi cap funds, as well as the mid-cap and small cap funds in May 2025.

BENCHMARK BOND YIELDS REPEAT FALL IN MAY 2025

Bond yields fell for the second month in a row in May 2025. In April, the 10-year bond yield had fallen from 6.51% to 6.32%; and in May it fell further to 6.18%. There were several factors behind this sharp fall in bond yields. There are hopes of 25 bps rate cut by the RBI in its June policy and probably one more this year. Secondly, the fiscal deficit was manged at 4.77% for FY25, well within its 4.8% revised target. Now 4.4% for FY26 looks possible. Above all, the government easing norms for bond purchases by FPIs increased demand, pulling down yields further. Here is a look at equity, debt, and hybrid funds in May 2025.

1. Equity Large-Cap Funds

Top performing Direct Plans (Growth Option) on 5-year returns (as on 31st May-25):

Name of Fund	1-Year Return	3-Year Return	5-Year Return
Nippon India Large Cap Fund (G)	11.425%	23.250%	28.951%
ICICI Pru Bluechip Fund (G)	11.746%	20.550%	25.506%
HDFC Large Cap Fund (G)	7.553%	19.054%	25.010%
Category Average	9.145%	17.201%	22.111%
Data Source: Morningstar

2. Equity Multi-Cap Funds

Top performing Direct Plans (Growth Option) on 5-year returns (as on 31st May-25):

Name of Fund	1-Year Return	3-Year Return	5-Year Return
Nippon India Multi Cap (G)	10.959%	28.133%	35.646%
Quant Active Fund (G)	-5.475%	17.713%	32.172%
Mahindra Manulife Multi Cap (G)	9.814%	23.231%	30.652%
Category Average	9.962%	22.187%	28.572%
Data Source: Morningstar

3. Equity Flexi-Cap Funds

Top performing Direct Plans (Growth Option) on 5-year returns (as on 31st May-25):

Name of Fund	1-Year Return	3-Year Return	5-Year Return
Quant Flexi Cap Fund (G)	-2.631%	22.435%	34.870%
HDFC Flexi Cap Fund (G)	15.910%	25.847%	32.098%
JM Flexi Cap Fund (G)	4.158%	27.120%	29.519%
Category Average	9.105%	18.875%	24.073%
Data Source: Morningstar

4. Equity Mid-Cap Funds

Top performing Direct Plans (Growth Option) on 5-year returns (as on 31st May-25):

Name of Fund	1-Year Return	3-Year Return	5-Year Return
Motilal Oswal Mid-Cap Fund (G)	20.791%	33.310%	39.549%
Edelweiss Mid-Cap Fund (G)	18.606%	29.501%	35.969%
Nippon India Growth Fund (G)	13.990%	29.160%	35.692%
Category Average	10.508%	24.441%	30.981%
Data Source: Morningstar

5. Equity Small-Cap Funds

Top performing Direct Plans (Growth Option) on 5-year returns (as on 31st May-25):

Name of Fund	1-Year Return	3-Year Return	5-Year Return
Quant Small Cap Fund (G)	2.245%	28.973%	50.267%
Nippon Small Cap Fund (G)	7.382%	28.696%	41.419%
Bandhan Small Cap Fund (G)	22.897%	33.916%	39.715%
Category Average	10.439%	24.199%	36.320%
Data Source: Morningstar

6. Balanced Funds (Aggressive Allocation)

Top performing Direct Plans (Growth Option) on 5-year returns (as on 31st May-25):

Name of Fund	1-Year Return	3-Year Return	5-Year Return
BOI Equity and Debt Fund (G)	10.789%	23.266%	29.418%
JM  Aggressive Hybrid Fund (G)	4.128%	24.054%	29.100%
Quant Absolute Fund (G)	2.083%	16.417%	28.673%
Category Average	10.456%	16.803%	21.103%
Data Source: Morningstar

7. Dynamic Asset Allocation Funds (BAF)

Top performing Direct Plans (Growth Option) on 5-year returns (as on 31st May-25):

Name of Fund	1-Year Return	3-Year Return	5-Year Return
HDFC BAF (G)	8.465%	22.383%	27.027%
Baroda BNP Paribas BAF (G)	11.282%	17.343%	19.242%
Edelweiss BAF (G)	7.856%	14.576%	17.807%
Category Average	8.342%	13.740%	15.241%
Data Source: Morningstar

8. Multi-Asset Allocation Funds (MAAF)

Top performing Direct Plans (Growth Option) on 5-year returns (as on 31st May-25):

Name of Fund	1-Year Return	3-Year Return	5-Year Return
Quant Multi-Asset Fund (G)	8.199%	23.220%	34.421%
ICICI Pru Multi-Asset Fund (G)	14.106%	20.890%	26.165%
Tata Multi-Asset Fund (G)	10.519%	16.979%	20.841%
Category Average	10.781%	16.756%	20.815%
Data Source: Morningstar

9. Arbitrage Funds (Cash-Futures)

Top performing Direct Plans (Growth Option) on 5-year returns (as on 31st May-25):

Name of Fund	1-Year Return	3-Year Return	5-Year Return
Invesco India Arbitrage Fund (G)	7.864%	7.714%	6.250%
Kotak Arbitrage Fund (G)	7.854%	7.606%	6.185%
Tata Equity Arbitrage Fund (G)	7.934%	7.553%	6.160%
Category Average	7.221%	6.907%	5.492%
Data Source: Morningstar

10. Government Securities Funds (Gilt Funds)

Top performing Direct Plans (Growth Option) on 5-year returns (as on 31st May-25):

Name of Fund	1-Year Return	3-Year Return	5-Year Return
Edelweiss G-Sec Fund (G)	10.762%	8.983%	7.383%
ICICI Prudential Gilt Fund (G)	11.084%	9.420%	7.169%
SBI Magnum Gilt Fund (G)	11.033%	9.507%	7.045%
Category Average	10.669%	8.570%	6.193%
Data Source: Morningstar

11. Corporate Bond Funds

Top performing Direct Plans (Growth Option) on 5-year returns (as on 31st May-25):

Name of Fund	1-Year Return	3-Year Return	5-Year Return
Nippon Corporate Bond (G)	10.808%	8.635%	7.598%
Axis Corporate Debt Fund (G)	10.757%	8.507%	7.546%
Franklin India Corporate Bond (G)	11.277%	8.264%	7.289%
Category Average	10.099%	7.891%	6.635%
Data Source: Morningstar

12. Credit Risk Funds

Top performing Direct Plans (Growth Option) on 5-year returns (as on 31st May-25):

Name of Fund	1-Year Return	3-Year Return	5-Year Return
BOI Credit Risk Fund (G)	6.268%	6.137%	27.293%
DSP Credit Risk Fund (G)	24.292%	15.661%	12.520%
Baroda BNP Credit Risk Fund (G)	10.263%	8.771%	11.378%
Category Average	11.886%	9.020%	9.946%
Data Source: Morningstar

Having seen returns for various categories of funds for May 2025, some key takeaways.

WHAT WE READ FROM THE MAY 2025 MUTUAL FUND RANKINGS

Here are some key trends we deciphered from the MF rankings for May 2025.

1. Most equity funds in May 2025 showed improvement in 1-year returns. Five year returns are looking steep due to the COVID base effect.
2. Returns on debt funds improved at the longer end of the duration curve, largely due to lower fiscal deficit and hopes of another rate cut in June policy.
3. Above all, winners across categories (debt, equity, and hybrid) have been consistent with over 90% repetitions. Past returns appear to be a good index of the future!