Mutual fund investors have seen massive erosion in their portfolio valuations over the last 6 months amid one of the longest corrections in the Indian equity market. So amidst all this, if you are thinking of investing, it is very important to focus on mid- to long-term returns also while choosing a fund because short-term yields might not give a clear picture. Here we have selected the top 5 funds of SBI Mutual Fund, one of the leading fund houses with total assets under management (AUM) of Rs 10.75 lakh crore (as of 28 February, 2025). All these SBI funds have given more than 20% annualized returns over 3 years.
Why is a 3-year return important?
A 3-year period is a good benchmark to evaluate mutual funds. 1-year returns can be misleading at times, as global and domestic events can have a profound impact on the market in a particular period. For example, all mutual fund categories have been struggling in the last 6 months, as major stock indices have fallen by 10% to 25%. Due to this decline, the 1-year returns of many funds are looking poor. But funds that are giving a return of 20% or more in 3 years are considered to be really strong and sustainable funds.
Also read: Top 5 cheapest index funds to invest in 2025
Top 5 SBI mutual funds based on their 3-year annualised returns:
1. SBI PSU Fund – Direct Plan
Category: Sectoral
3-year returns (CAGR): 29.76%
Benchmark: BSE PSU TRI
Fund’s assets under management (AUM): Rs 4,149 crore
2. SBI Long Term Equity Fund – Direct Plan
Category: ELSS
3-year returns (CAGR): 23.80%
Benchmark: BSE 500 TRI
Fund’s assets under management (AUM): Rs 25,724 crore
3. SBI Healthcare Opportunities Fund – Direct Plan
Category: Sectoral
3-year returns (CAGR): 22.95%
Benchmark: BSE Healthcare TRI
Fund’s assets under management (AUM): Rs 3,113 crore
4. SBI Infrastructure Fund – Direct Plan
Category: Sectoral
3-year returns (CAGR): 22.71%
Benchmark: NIFTY Infrastructure TRI
Fund’s assets under management (AUM): Rs 4,325 crore
5. SBI Contra Fund – Direct Plan
Category: Contra Fund
3-year returns (CAGR): 22.06%
Benchmark: BSE 500 TRI
Fund’s assets under management (AUM): Rs 39,590 crore
(Data source: Value Research)
Also read: Top 10 tax-saving mutual funds in 2025 with 5-year returns up to 32 pc
3 out of the top 5 are sectoral funds and 1 contra fund
Interestingly, 3 out of these top 5 funds are sectoral funds, that is, they invest in a particular sector. Such funds can give great returns when their sector is performing well.
Apart from this, there is a contra fund, which usually invests in companies that are currently undervalued in the market, but which can have good long-term growth. There is also an ELSS fund in the list of top 5 SBI mutual funds based on 3-year returns.
Benefits and risks of investing in these funds
Benefits of investing in sectoral funds:
Strong long-term growth: These funds have been successful in giving good returns over a period of 3 years.
Ability to withstand market volatility: These funds have performed steadily despite the recent recession.
High growth potential in sectoral funds: If a sector booms, the funds associated with it can give tremendous returns.
Risks of investing in sectoral funds:
Risk of sectoral funds: These are dependent on a single sector, if that sector performs poorly then the funds will also be affected.
Uncertainty of contra funds: These funds invest in companies that may seem weak at the moment, so their performance can be slow sometimes.
Market risk will always remain: If the stock market falls, the NAV (net asset value) of these funds can also be affected.
For which investors are these funds right?
For long-term investors: If you can invest for 5 years or more, then these funds can prove to be good.
Those who are willing to take high risk: Sectoral and contra funds are especially suitable for those investors who expect better returns by taking more risk.
Not for first-time investors: If you are investing in mutual funds for the first time, then do proper research or consult a financial expert before investing in such funds.
Also read: Top 5 dividend yield mutual funds with highest returns in 5 years
Summing up
These top 5 mutual funds of SBI have performed well in the last 3 years. However, it is important to keep in mind your financial goals, risk capacity and time frame before investing. Only proper research and long-term planning increase the chances of getting better returns.
Disclaimer: The above content is for informational purposes only. Mutual Fund investments are subject to market risks. Please consult your financial advisor before investing.
