Investors are always looking for various investment options that can provide high returns. Although mutual funds offer stable returns over the medium to long term, investors are always looking for higher returns. How about taking on a bit of high risk and aiming for high mutual fund returns? Instead of compromising on 10% annualized returns, what if we could aim and aim for 12% or 15% annualized returns? In this article, we will provide 5 Best High Yield Mutual Funds to Invest in 2022 and 2023 which can generate superior returns in the medium and long term.

Read also : 5 Aggressive Balanced Mutual Funds to Invest in 2022

What are high yield mutual funds?

Index or large-cap funds offer stable returns between 10% and 12% (annualized) over the medium to long term. However, if one can take a higher risk and invest in the specific fund category, one can expect annualized returns of 12-15%.

Mid cap funds, small cap funds, sector funds and thematic mutual funds can generate high returns. However, some of these funds can only outperform in the short to medium term. Investing in such funds could be more risky. Therefore, one should only choose mutual funds that can outperform in the medium to long term.

How did we screen these high yield mutual fund plans?

There are hundreds of mutual fund plans. However, picking up only 5 funds could be a big challenge. It should not be taken away that other funds are bad. Filters are applied to the restricted list of a smaller group of funds.

1) Screened mutual funds that have outperformed in various market cycles of mid and small capitalization mutual fund categories.

2) Considered sector funds that can consistently deliver medium to long-term returns. These include IT/technology and banking funds. We avoided Infra, Pharma, FMCG, etc., as these sectors outperform in the short term and are more cyclical in nature, but more risky in the medium to long term.

3) Pre-screened funds that have delivered consistent annualized returns over the past 3-5 years

4) Again, screened funds that have delivered consistent returns.

5) Finally, considered funds that have the lowest expense ratio.

Performance metrics collected from ValueResearchOnline

Who can invest in these mutual funds?

Since the selected funds come from mid or small capitalizations or from a specific sector, they carry a high risk. For example, the IT/Technology category has corrected by more than 20% over the last 6 months. Although there is an opportunity for new investments, such a downfall may be there in the short term, even in the future.

If you are a high risk investor willing to invest for 5-10 years and looking for high yield mutual funds, you can invest in such funds.

Moderate to low risk investors should avoid these funds.

Investors who want to invest for the short term should also avoid such funds.

Top 5 Best High Yield Mutual Funds To Invest In 2022-2023

Here is the list of high yield mutual fund plans.

#1 – Robeco Canara Emerging Equity Fund

#2 – Quantitative mid-cap fund

#3 – SBI Small Cap Fund or Kotak Smallcap Fund

#4 – Tata Digital India Fund

#5 – SBI Banking and Financial Services Fund

There are several other consistent funds in these categories, so don’t think the other funds are bad.

Best High Yield Funds – Detailed View

Let’s get into more information about these funds

#1 – Robeco Canara Emerging Equity Fund

This mutual fund invests in large and mid capitalization stocks.

Currently, this fund invests 60% in large-cap stocks, 38% in mid-cap stocks, and 2% in small-cap stocks.

Fund Performance – Annualized Returns

  • Last 7 years – 17%
  • last 5 years – 15%
  • Last 3 years – 25%
  • 1 year ago – 1%

Fund performance – rolling returns

With a 3-year rolling return perspective, this fund generated:

  • More than 12% returns – 64% of times
  • 1% to 12% returns – 31% of times
  • Negative returns – 5% of times

With a 5-year rolling return perspective, this fund generated:

  • More than 12% returns – 86% of times
  • 1% to 12% returns – 14% of times
  • Negative returns – Zero times

This fund has generated an annualized return of 21.3% since its inception. This fund is able to beat the benchmark consistently over the past 5-10 years. With the lowest expense ratio of 0.59%, it is one of the best high yield mutual funds to invest in 2022-23.

I personally invest in this fund and we talked about it in our List of Best Large and Mid Cap Mutual Funds in our previous articles.

#2 – Quantitative mid-cap fund

This fund invests primarily in mid-cap companies in India.

Currently, this fund invests 31% in large-cap stocks and 72% in mid-cap stocks.

Fund Performance – Annualized Returns

  • Last 7 years – 18%
  • Last 5 years – 23%
  • Last 3 years – 41%
  • 1 year ago – 20%

Fund performance – rolling returns

With a 3-year rolling return perspective, this fund generated:

  • More than 12% returns – 59% of times
  • 1% to 12% returns – 39% of times
  • Negative returns – 2% of times

With a 5-year rolling return perspective, this fund generated:

  • More than 12% returns – 43% of times
  • 1% to 12% returns – 56% of times
  • Negative returns – 1% of times

This fund has generated an annualized return of 17.3% since its inception. With the lowest expense ratio of 0.63%, this is one of the best high yield mutual funds to invest in 2022-2023.

#3 – SBI Smallcap Fund

This program invests primarily in small cap stocks in India, but may also invest in other large or mid cap stocks.

Currently, this fund invests 55% in mid-cap stocks and 45% in small-cap stocks.

Fund Performance – Annualized Returns

  • Last 7 years – 22%
  • Last 5 years – 20%
  • Last 3 years – 33%
  • 1 year ago – 16%

Fund performance – rolling returns

With a 3-year rolling return perspective, this fund generated:

  • More than 12% returns – 67% of times
  • 1% to 12% returns – 33% of times
  • Negative returns – zero times

With a 5-year rolling return perspective, this fund generated:

  • More than 12% returns – 87% of times
  • 1% to 12% returns – 13% of times
  • Negative returns – zero times

This fund has generated an annualized return of 27% since its inception. With the lowest expense ratio of 0.74%, it is one of the best high yield mutual funds to invest in India currently.

If you remember, we covered SBI Small Cap Mutual Fund among 10 mutual funds with the highest SIP returns in 10 years.

#4 – Tata Digital India Fund

The objective of this fund is to invest at least 80% in shares of companies in the IT/Technology sector in India.

Currently, this fund invests 87% in large-cap stocks, 8% in mid-cap stocks, and 5% in small-cap stocks.

Fund Performance – Annualized Returns

  • Last 5 years – 27%
  • Last 3 years – 27%
  • 1 year ago – minus 18%

Fund performance – rolling returns

With a 3-year rolling return perspective, this fund generated:

  • More than 12% returns – 96% of times
  • 1% to 12% returns – 4% of times
  • Negative returns – zero times

With a 5-year rolling return perspective, this fund generated:

  • More than 12% returns – 100% of the times
  • 1% to 12% returns – zero times
  • Negative returns – zero times

This fund has generated an annualized return of 20% since its inception. Recently, tech stocks have taken a huge hit over the past 6 months. This is a wonderful opportunity for investors to invest a lump sum or via SIP for 6 months in this fund. With the lowest expense ratio of 0.34%, it is one of the best high-yielding mutual funds for 2022-23 in the technology sector.

#5 – SBI Banking and Financial Services Fund

The Fund invests at least 80% in shares of companies active in banking and financial services.

Currently, this fund invests 81% in large-cap stocks, 15% in mid-cap stocks, and 4% in small-cap stocks.

Fund Performance – Annualized Returns

  • Last 7 years – 18%
  • Last 5 years – 13%
  • Last 3 years – 16%
  • 1 year ago – 5%

Fund performance – rolling returns

With a 3-year rolling return perspective, this fund generated:

  • More than 12% returns – 61% of times
  • 1% to 12% returns – 37% of times
  • Negative returns – 2% of times

With a 5-year rolling return perspective, this fund generated:

  • More than 12% returns – 72% of times
  • 1% to 12% returns – 28% of times
  • Negative returns – zero times

This fund has generated an annualized return of 15% since its inception. The banking sector is an evergreen sector in India, which continues to grow year by year. Although this fund expense ratio is just over 0.78%, it is one of the best high-yielding mutual funds in the banking and financial services category. We have covered this fund as part of The best bank funds to invest early years too.

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Suresh KP
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