Nine most dependable mutual funds of the last 10 years

If memes are an indicator of popularity, the line "Mutual fund investments are subject to market risk" has certainly achieved that status. More so because equity mutual funds , in particular, are linked to the market, and as you know, the trajectory of the market is never linear. It has historically snaked upwards, but not without its short-term swings.

Given this context, we wanted to identify equity mutual funds that have navigated market downswings with relative poise.

But before we set out on our analysis, we had to look for periods in the past decade where the markets showed significant downturns. In total, there were six such occasions:

The dependables

Once we identified the lean periods, we analysed 70 funds in the growth category with a 10-year track record. The growth category includes flexi-cap funds, large- and mid-cap funds, tax-saving funds and value funds.

Of the 70 funds, nine demonstrated great resilience. By great resilience, we mean these are the mutual funds that performed better than their category average and benchmark (BSE 500 TRI) at least 65 per cent of the time in falling markets and have a strong five-year performance record.

The nine funds are as follows:

Our observations

The well-known Parag Parikh Flexi Cap Fund sits at the top of the tree. Despite having a large asset under management (AUM), this fund has always outperformed its peers in the long run, partly because it has the flexibility to invest in international companies. The fund has maintained an average of 22 per cent in international equities in the last decade, which has helped it generate alpha (extra returns) over other flexi-cap funds .

Strikingly, the common thread running across all the funds on this list - except for Quant ELSS Tax Saver Fund - is that they follow the 'growth at a reasonable price (GARP)' investment style. The GARP strategy is a blend of growth and value style. Simply put, it aims to buy growing companies that are not too expensive to buy. This way, these companies don't react wildly to market downswings.

As we take your leave, we'd like to point out that these funds are not necessarily a part of our recommendation. We have simply identified funds that have shown ample steel in times of trouble. To find our list of Best Buys, you can visit this page .

Also read: Funds with high returns can lose you money