The concept of investment returns is both exciting and terrifying at the same time. Because it is inherently so volatile, you don’t always know what to expect from a particular investment product, no matter how popular it is. Take mutual funds, for instance. They are one of the more mainstream investment vehicles today. Yet, it can be challenging to predict their performance.

However, this prediction is necessary. Without knowing the average returns of a particular fund, you won’t be able to decide whether it’s a suitable investment for your goals. In fact, you won’t even know what to expect. In this article, we explore the average returns of different types of mutual funds so you can devise a more precise plan for your portfolio.

Equity Mutual Funds

This broad category of mutual funds includes large-cap, mid-cap, small-cap, balanced, and equity-linked mutual funds. Each of these offers varying average returns. On average, equity mutual funds returns range between 10 and 12 percent, but this number can go much higher or lower depending on multiple factors.

For example, in 2020-2021, several mutual funds reported 100 percent returns, some even touching a historical high of 150 percent. While the staggering numbers can make you feel like investing your capital in equity funds immediately, it is important to consider why the returns were so inflated. To put it simply, the pandemic and economic shutdown in India and around the world caused the markets to come crashing down around March 2020. Returns were at multi-year lows. However, things soon started recovering, and mutual funds escalated over the next year.

Today, the same funds are reporting average returns like others in the category. Therefore, it’s advisable to assess a fund not just based on one-year returns. You need to look at the annualized average returns, also known as rolling returns, for a specific period as it’s a valuable way of examining fund behavior.

Average returns based on tenure

Balanced funds suitable for medium-term investments of 2 to 4 years have reported an average of 8 to 12 percent returns per annum. Funds held for shorter periods up to 2 years, such as debt funds, have a historical return average of around 7 to 9 percent per annum, making them a low-risk, low-return option.

If you’re considering long-term investments exceeding 5 years, you might accrue the highest returns. The top-rated funds in this category can potentially provide 12 to 20 percent returns based on historical data. Examples include mid and large-cap funds or funds that are equity-oriented, which makes them sensitive to the market’s fluctuations.

It’s crucial to note that these numbers can be higher or lower depending on market conditions and several other factors. Therefore, you should examine individual funds and perform extensive research by talking to professional fund managers and financial experts before investing.


Contrary to popular belief, the past returns of a fund can be an essential indicator of future returns. Thankfully, it’s a lot easier now to keep track of mutual funds returns due to platforms like the Tata Capital Moneyfy App. Along with growth, you can also monitor the fund’s ratings and compare them with other funds to make an educated decision for future goals.