Last year's top-quarter equity funds: where are they now?

The test

Every year-end list of "best funds" invites one question: do they stay best? We checked it on our own data. For each of nine equity categories, we ranked Direct Growth funds by their return in the year to 17 October 2025, took the top quarter, and looked at where the same funds ranked in the following year, to 16 October 2026.

Only funds with NAVs from before October 2024 were included, which leaves 289 funds: ELSS, flexi cap, focused, large & mid cap, large cap, mid cap, multi cap, small cap and value. Plans with IDCW options and segregated portfolios are excluded. Chance alone would put a quarter of the top funds back in the top quarter.

Overall: 12 of 75 repeated

The movement runs both ways. 28 funds that were in the bottom quarter in the first year were in the top quarter in the second. A rank in one year says little about the next.

By category

Quarters are cut within each category, so group sizes differ by one or two. "Bottom half" includes the bottom quarter.

ELSS was the starkest. Half of its 14 first-year leaders (7) landed in the bottom quarter, and none stayed on top. The first-year leaders averaged +5.1%; the same funds averaged −5.7% in the second year, against −2.4% for the whole category.

Value funds were the exception. Three of six leaders repeated. The category is also small, so the result is thin evidence. The first-year leaders averaged +3.7% and then −1.1%, against −1.0% for the category: the leaders did not fall behind.

What the returns looked like

Averages are simple means of one-year returns. Small cap is worth a second look: its first-year leaders earned only +0.9%, because the whole category had a weak year to October 2025, yet they were still near the category average (+8.8% against +9.2%) a year later. In large cap and flexi cap, leaders fell below their category average in year two. The equity category scorecard has the current category returns.

Why ranks move

A one-year return reflects what a fund held during that year. A portfolio built around one theme or style leads when it is in favour and lags when it is not, and the next year's market can favour something else. A fund that ranks first by holding more mid and small caps than its peers is taking a bet the next year may not reward.

Our rolling versus trailing returns post shows the same effect over longer windows: a single trailing number hides how often a fund led and lagged.

How to use this

• Treat a one-year ranking as a description of the past year, not a shortlist.
• Look at several windows together: the fund page shows one, three and five-year returns beside the category's, and the screener lets you filter on all of them.
• Check risk and cost alongside return: volatility, drawdown and the expense ratio do not shuffle as much as the rank does.
• If you hold a fund because it topped a list, check whether it still would on a three-year view.

Limits

Two windows is a small sample, and 2025–26 was an unusual stretch: the Nifty 50 fell about 11% in the year to 19 October 2026. Returns are Direct Growth NAV returns to the dates stated. This is a description of rank movement, not a recommendation to buy or sell any fund.