In investing, headline returns grab attention, but what truly shapes an investor’s journey is consistent performance across market phases. While many mutual funds manage to beat their benchmark over a specific period, very few succeed in doing so consistently— across time frames, market cycles, and entry points. That gap is what this study tries to measure.
That said, consistency is a starting point, not a final verdict. A fund’s suitability for you depends on several other things — your investment horizon, risk appetite, the fund manager’s investment philosophy, portfolio concentration, and how the fund fits your broader asset allocation. Think of this study as one filter in a larger, more personalised process of choosing a fund—not a readymade shortlist to invest from.
Rolling returns
Most investors judge a mutual fund’s performance by point-to-point returns, such as one-year or three-year numbers. However, this approach can be misleading. Returns can vary sharply depending on the start and end dates chosen, often overstating a fund’s true effectiveness. For instance, investing at a market low and exiting at a peak can make returns appear spectacular.
A scheme that appears to outperform over a five-year period, for instance, may still have delivered prolonged phases of underperformance within that window.
For investors, this translates into uncertainty and behavioural stress as entering at different times within that period could have experienced very different outcomes.
Rolling returns measure every possible return period within a time frame. Instead of measuring returns between two arbitrary dates, rolling returns evaluate performance across every possible entry and exit point within a given period. More importantly, they align performance measurement with actual investor experience. This approach eliminates entry and exit bias and provides a far more comprehensive picture of consistency.
Our analysis of 118 diversified equity funds with at least a five-year track record shows how rare true consistency is. Just 19 funds—about 16% of the sample—managed to deliver sustained outperformance across multiple rolling periods.
Consistent performers These 5-star rated funds have generated returns higher than benchmarks across multiple rolling periods and on most trading days in FY26. Source: ACE MF. AUM and Expense ratio as of Mar 2026. Sharpe ratio calculated on 3-year rolling returns for FY2025-26.
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Fund beta based on daily data for FY2025-26. Shortlisted funds are based on a study and not a recommendation.
Consistent funds
ET Wealth analysed equity diversified (or market cap based) mutual funds to identify those that meet a stringent standard of performance consistency. Sectoral, thematic, and ELSS (Equity Linked Savings Scheme) funds are not included. Market-cap based funds—including largecap, large & mid-cap, mid-cap, small-cap, and flexi-cap categories—were included. The data was sourced from the ACE MF database. Benchmarks were selected based on the most followed indices within each category:
In all cases, the Total Return Index (TRI) version of the benchmark was used. TRI assumes that all dividends paid by constituent companies are reinvested back into the index. The screening criteria were:
Rolling return periods: 2-year, 3-year, and 5-year.
Evaluation period
Every trading day between 1 April 2025 and 31 March 2026.
Study period
For 5-year rolling returns, calculations are made for every trading day between FY 2020-21 and FY2025-26. For 3-year rolling returns, calculations are made for every trading day between FY2022–23 and FY2025-26. For 2-year rolling returns, calculations are made for every trading day between FY2023-24 and FY2025-26. To qualify, a fund had to outperform its benchmark for at least 80% of the trading days, across all three rolling horizons.
Why FY2025-26 was chosen?
The choice of FY2025-26 as the evaluation window was deliberate as it was a difficult year for equity markets. The benchmark Nifty 50 index posted its weakest annual performance since FY2019-20, leaving a large number of retail portfolios under pressure. The year was characterised by heightened volatility, uneven sectoral trends, and rapidly shifting investor preferences.
What the study reveals?
Only 19 funds met the criteria, which means one in six funds demonstrated consistent outperformance across all rolling periods and over most trading days during the year. The ratings from independent investment research firm Value Research underpin the quality of the shortlisted funds. Eighteen of the 19 funds are 4-star or 5-star rated. After restricting the list to funds with a 5-star rating, the universe comprises just 11 schemes.
The result of this study is a reminder that the “best” fund isn’t necessarily the one at the top of the charts today; it’s the one that stays above the benchmark consistently, regardless of when an investor evaluates it. however, schemes that didn’t feature among the shortlisted 19 funds do not imply poor quality; it suggests that performance may have been less consistent and the investment journey more volatile.
How chosen funds differ
Most of the shortlisted 11 funds have also demonstrated strong risk discipline—10 of the 11 funds recorded a beta of less than 1 during FY2025-26, indicating lower sensitivity to market (or benchmark) movements. This suggests that these funds focussed on balanced and resilient portfolio construction instead of taking excessive market risk.
The funds also scored better in terms of expense ratio—the fees charged by the asset management company (AMC). All 11 funds had expense ratios lower than the average for all equity-diversified funds (data as of March 2026), indicating lower investment costs.
In terms of sector allocation, banking and finance, retailing, automobiles, and healthcare emerged as favoured sectors among the selected funds, based on the number of shares held in March 2026.
