A Decade of Wealth: Unpacking the 10-Year Performance of Equity Mutual Funds

Sumit Desai
October 31, 2025

For long-term investors, the 10-year mark is a significant milestone. It smooths out short-term market noise and reveals the true power of compounding and a fund's underlying investment strategy. But in a crowded market of over 539 direct equity mutual funds, how have they actually performed over the last decade?

An analysis of the 210 funds that have a track record of more than 10 years provides a fascinating look into wealth creation. These seasoned funds have delivered an impressive average return of 15.58% annually over the last 10 years.

However, the real story lies in the details. While the average is strong, the performance varies widely. We can break down the performance of these 210 funds into four distinct categories relative to this 15.58% average.


1. The Best Performers: The Elite Club

This exclusive group represents the funds that have not just beaten the average but have delivered truly exceptional returns, generating significant alpha for their investors.

  • Funds in this category: 10 (less than 5% of the total)
  • Performance Range: Above 19.58% (more than 4% above the average)

The absolute top performer is the Quant ELSS Tax Saver Fund, which delivered a staggering 22.13% CAGR, placing it in a league of its own. It is the only fund to have beaten the average by more than 6%.

Joining this elite tier are 9 other funds that have generated returns between 19.58% and 21.58%. A noteworthy fund in this bracket is the DSP Natural Resources and New Energy Fund with a return of 20.14%, showcasing the potential of thematic investing when the theme plays out over a long cycle.

Observation Summary: Achieving truly exceptional, market-crushing returns is incredibly rare. Less than 5% of funds that have been around for over a decade fall into this category. It highlights the difficulty of picking a fund that can consistently outperform its peers by a significant margin over the long term.


2. Above Average Performers: The Solid Achievers

This is the largest group of outperformers, comprising funds that have successfully beaten the average but by a more modest margin. They have proven their mettle and delivered solid, wealth-building returns.

  • Funds in this category: 90 (approximately 43% of the total)
  • Performance Range: 15.58% to 19.58% (0% to 4% above the average)

This category includes a wide variety of funds that have consistently executed their strategies. Examples include:

  • Mirae Asset Large & Midcap Fund (18.64%)
  • Bandhan Large & Mid Cap Fund (18.01%)
  • JM ELSS Tax Saver Fund (17.42%)
  • SBI Focused Equity Fund (15.89%)

Observation Summary: A substantial number of funds—nearly half of the long-standing ones—managed to beat the average. This indicates that skilled fund management can add value. However, the majority of this outperformance is concentrated in the 0% to 3% range above the average, suggesting that while beating the average is achievable, doing so dramatically is not the norm.


3. Below Average Performers: The Underachievers

Just as many funds beat the average, a nearly equal number lagged it. While these funds still generated positive and often respectable returns, they failed to keep pace with their peer group average over the decade.

  • Funds in this category: 88 (approximately 42% of the total)

  • Performance Range: 12.58% to 15.58% (0% to 3% below the average)

This group demonstrates that even with professional management, underperformance is a common reality. Notable funds that fall just below or within this bracket include:

  • SBI ELSS Tax Saver Fund (15.58%), which landed exactly on the average.

  • Motilal Oswal Flexi cap Fund (14.55%)

    • Bandhan Large Cap Fund (14.64%)

    • Tata Large Cap Fund (13.67%)

Observation Summary: This is a crucial finding for investors. There is roughly a coin-flip chance that an actively managed fund will underperform the peer average over a 10-year period. While the returns might still help achieve financial goals, investors in these funds could have earned more by simply being in an average fund.


4. The Worst Performers: The Significant Laggards

This final group consists of funds that have substantially underperformed the average, highlighting the inherent risks in fund selection.

  • Funds in this category: 22 (approximately 10% of the total)

  • Performance Range: Below 12.58% (more than 3% below the average)

These funds have delivered returns that are significantly lower than what investors could have gotten from an average equity fund. For example, the Aditya Birla Sun Life International Equity Fund (11.26%) and the Franklin Asian Equity Fund (9.24%) are among the laggards. It's worth noting that funds with an international or specific thematic mandate can underperform broad domestic averages for extended periods if their chosen theme or geography faces headwinds.

Observation Summary: About one in ten long-standing funds has dramatically failed to keep up with the average. This underscores the importance of due diligence and periodic portfolio reviews. Sticking with a persistent underperformer can lead to a significant opportunity cost over a decade.

Key Learnings for Investors

This 10-year analysis offers several powerful takeaways:

  1. Equity Investing Works Over the Long Term: An average return of 15.58% over a decade is a testament to the wealth-generating power of staying invested in equities.

  2. Massive Outperformance is Rare: Don't chase the absolute top performer. The odds of picking the next decade's "elite" fund are very slim. A more realistic goal is to find solid, above-average achievers.

  3. The "Average" is a Powerful Benchmark: With roughly half of the funds underperforming the average, investors should seriously consider a core holding in low-cost index funds, which are designed to deliver average market returns.

  4. Diversification is Your Best Friend: The wide gap between the best (22.13%) and worst (9.24%) performers shows the risk of concentrating your investment in a single fund. Spreading your capital across 3-4 well-chosen funds can balance risk and reward.

  5. Review, But Don't React Hastily: A 10-year view is revealing. While you shouldn't churn your portfolio based on one year's performance, a fund that consistently lags its peers and the benchmark over 3-5 years warrants a serious review.