7 Mutual Funds Gave Over 30% Returns Since Last Diwali. Should You Invest?

A mutual fund that gave almost 87% annualised returns in about a year sounds like the kind of investment everyone wishes they had discovered earlier. That is what Nippon India Taiwan Equity Fund achieved in a study of mutual fund performance since Diwali 2025. Yet the same study found that 436 out of 576 schemes recorded negative returns over the period, showing just how different the experience of two equity mutual fund investors could have been.

The seven winners had something in common. None was a diversified fund focused on Indian stocks. They invested overseas, including in Taiwan, Brazil and the United States, or in specialised industries such as metals and artificial intelligence. Are these funds attractive investments today, or did they take risks that happened to pay off during this particular year?

Which 7 Mutual Funds Delivered Over 30% Returns Since Diwali 2025?

An analysis examined 576 equity and equity-oriented schemes from Diwali 2025, celebrated on October 20, to the period ending October 24, 2026. Only seven schemes reported annualised returns above 30%. The table below ranks them by the returns reported in that analysis, rather than by how suitable they may be for a particular investor.

The gap within the wider study was substantial. Of the 576 schemes examined, 139 delivered positive returns, one was flat and 436 had negative returns. That means roughly three out of four schemes in this particular sample ended the period in negative territory. It does not mean three out of four mutual fund investors lost money, because people invest on different dates, make SIP contributions at different prices and may have held their funds for much longer than a year.

Why Did International Mutual Funds Dominate the List?

The simple explanation is that an equity mutual fund's return comes from the investments it owns, not from the words equity mutual fund in its name. If a fund invests in Taiwanese chipmakers, its fortunes depend heavily on that industry. If it invests in Brazilian banks and businesses, it reacts to a very different economy. If it focuses on a handful of US technology giants, their share prices can have an outsized effect on the fund.

Taiwan and Metals: Two Different Ways to Benefit From Global Industry Trends

The Nippon India Taiwan Equity Fund was the strongest performer at 87.36%, and its underlying exposure helps explain why its results could be so different from those of an Indian diversified fund. Taiwan is a major part of the world's semiconductor and electronics supply chain. The fund's disclosed portfolio has included businesses such as MediaTek, MPI Corporation, Chroma ATE and Nanya Technology, whose activities range from chip design to electronics and testing equipment. August 2026 sector breakdown also showed that technology represented about 85% of its equity-sector allocation.

That creates an opportunity when investors are optimistic about demand for computing, chips and electronic equipment. A company supplying an important part of that chain can see stronger orders, improving profit expectations or a higher market valuation, all of which may support its share price. But this also means that holding several Taiwanese shares is not necessarily the same as being widely diversified. If chip demand slows or investors stop paying high prices for technology growth, several holdings can weaken together.

The ICICI Prudential Strategic Metal and Energy Equity FoF followed with 54.87%, but it is exposed to a different set of forces. According to its scheme objective and portfolio disclosures, the Indian fund invests predominantly in the First Trust Strategic Metal and Energy Equity UCITS Fund. That overseas fund invests in businesses connected with metals and energy, rather than simply holding bars of gold, barrels of oil or other physical commodities.

The difference between owning a commodity and owning a company that produces it is important. Imagine a mining company whose selling price rises while its production costs stay broadly unchanged. Its profits might grow faster than the metal price, but the opposite could happen if costs rise or production disappoints. So a metals-and-energy equity fund can gain from a favourable business cycle while still carrying normal stock-market risks, company-specific problems and changes in how investors value those businesses.

Brazil and Emerging Markets: Diversifying Across Countries Does Not Remove Risk

The third winner, HSBC Brazil Fund, returned 45.75%. It mainly invests through HSBC's overseas Brazil equity fund, giving Indian investors access to businesses operating in a market with different industries, interest rates and economic conditions. Brazil is often associated with commodities, but this fund should not be reduced to a simple commodity bet. August 2026 sector allocation showed financial services as its largest sector, at about 34.5%, followed by meaningful exposure to industries such as industrials, materials and utilities.

Why does that matter? A country fund can benefit from improving business conditions, stronger earnings or a change in how global investors view that country, even when the Indian stock market is weak. It can also lose value because of local inflation, politics, currency movements or a downturn in important domestic industries. Buying a Brazil fund takes some money outside India, but it also concentrates that money in one other country. It solves one kind of concentration while introducing another.

The Edelweiss Emerging Markets Opportunities Equity Offshore Fund, which delivered 31.05%, takes a broader approach. It invests predominantly in the JPMorgan Funds Emerging Markets Opportunities Fund, whose investment universe includes companies across developing economies. That gives its manager more countries and companies to choose from than a Brazil-only or Taiwan-only strategy, although the actual diversification still depends on the stocks and markets the underlying manager selects.

US Technology and AI: Three Funds, but Potentially Similar Risks

The remaining three winners show another side of the same story. The Mirae Asset NYSE FANG+ ETF Fund of Fund delivered 45.15% by investing predominantly in the Mirae Asset NYSE FANG+ ETF. Its index focuses on 10 large US growth and technology-related companies, with an equal-weight approach that gives each company a meaningful role. This can work well when investors favour the businesses driving digital advertising, cloud computing, online services and other fast-growing technology markets.

However, investing through a fund containing just 10 stocks is very different from investing in the entire US market. When the market is enthusiastic about those businesses, the fund can rise sharply, but the same concentration can cause substantial falls when expectations change. Good companies can also become expensive investments if their stock prices rise much faster than their profits. That is why the quality of a business and the price paid for its shares are two separate questions.

The Mirae Asset S&P 500 Top 50 ETF Fund of Fund returned 41.58%. Its underlying ETF focuses on the 50 largest constituents of the S&P 500, not all 500 companies in the full index. That gives it greater exposure to America's biggest businesses, including a meaningful weight in large technology names. If those giants outperform smaller members of the index, this strategy can benefit, but it also carries more concentration than a fund tracking the broader S&P 500.

Finally, the Mirae Asset Global X Artificial Intelligence & Technology ETF FoF returned 30.67%. It invests predominantly in a Global X ETF focused on companies involved in artificial intelligence and related technology. Its portfolio can include businesses associated with software, computing power and digital infrastructure, making its performance sensitive to expectations about future AI spending and profits. The opportunity may be large, but a promising technology does not guarantee that every company or fund connected with it will produce high shareholder returns.

What Does a 30% CAGR Since Last Diwali Actually Mean?

The word CAGR makes the headline sound like a long record of steady growth, but here it describes a period of only about one year. CAGR stands for compound annual growth rate. It expresses the pace of growth as an annual rate, which is useful when comparing investments held over the same period. It does not mean the fund earned that rate every year in the past, and it certainly does not mean the fund will keep earning it in the future.

To see why, consider a simple example. If ₹1 lakh grows by 30% in one year, it becomes ₹1.30 lakh. If the same 30% return somehow continued every year for five years, the amount would reach about ₹3.71 lakh. That is what compounding means, but it is a mathematical illustration rather than a realistic forecast for these schemes. A fund can deliver an extraordinary year followed by a flat year or a loss, especially when it focuses on one country or industry.

A fund's return is also different from the return an investor personally earns. This ranking compares performance over specific dates, similar to holding a lump sum from the beginning. Someone who started a monthly SIP halfway through the year bought units at several different NAVs, so their result would depend on the timing of those instalments.

That is why CAGR and XIRR answer different questions. CAGR is useful for understanding how a single investment or a fund grew over a stated period. XIRR is more appropriate for calculating the annualised return on your actual SIP instalments and withdrawals. An investor may have chosen one of the seven winning funds and still have a personal return different from the number in the table.

Why Does It Matter That 6 of the 7 Winners Are Fund of Funds?

Six schemes on the list use a structure called a fund of funds, or FoF. Instead of using an Indian investor's money to buy overseas shares directly, the Indian mutual fund buys units of another mutual fund or ETF, which then holds the actual investments. For example, the Indian Mirae Asset FANG+ FoF holds units of its underlying India-listed FANG+ ETF, and that ETF gives exposure to US stocks. The investor owns units of the FoF, not the individual US shares.

There is nothing automatically wrong with this arrangement. It can make international markets accessible through an Indian mutual fund account, and it allows an AMC to use an established overseas investment strategy. But it creates a second layer that investors need to understand. They should check what the underlying fund actually owns, how much both layers cost and whether the FoF can transact efficiently in the fund or ETF it holds. fund of funds explainer covers this basic structure and why the underlying portfolio matters.

Some FoFs here hold overseas funds, while others hold ETFs listed on Indian exchanges. A mutual fund is normally bought or redeemed at its applicable NAV, but ETF units trade on an exchange where buyers and sellers can push the market price above or below the value of the shares held inside. The two prices usually stay fairly close, but a shortage of new ETF units can create a large gap.

This is not a theoretical concern in October 2026. Value Research compared the closing prices of international ETFs with their underlying NAVs on October 21. It found that the Mirae Asset NYSE FANG+ ETF traded at ₹265.53 per unit even though its underlying NAV was ₹174.86, a premium of about 51.9%. The Mirae Asset S&P 500 Top 50 ETF traded at ₹104.23 against a NAV of ₹67.80, a premium of about 53.7%. These are the premiums of the underlying ETFs, not separate premiums quoted for the FoF units.

Imagine buying something worth ₹100 for ₹150 simply because there are very few units available. If the underlying investments stay worth ₹100 but the market premium disappears, the trading price can fall sharply even though the companies themselves have not lost value. A fund of funds holding that ETF can also be affected when the market value of its ETF holdings changes. Mirae Asset's scheme documents explicitly warn that the market price of an underlying ETF may differ from its NAV and affect the FoF's performance.

This is a particularly important qualification to the 45.15% FANG+ FoF return and the 41.58% S&P 500 Top 50 FoF return. It would be wrong to assume those figures represent the gain in the underlying US shares alone, and the published ranking does not separate stock gains from changes in ETF premiums. NSE also warned in September 2026 that some international ETFs were trading at substantial premiums because creation of fresh units was restricted. The return of a global ETF-based FoF can therefore reflect both investment performance and how the underlying ETF is being priced in India.

Why Can Some Top-Performing International Funds Stop Taking New Investments?

The same restrictions behind unusually high ETF premiums can affect whether an international mutual fund accepts fresh money. Indian mutual funds operate under overseas investment limits, including an overall industry ceiling of US$7 billion for overseas securities and a separate US$1 billion ceiling for overseas ETFs. When the available capacity is exhausted, a fund house may have to pause new subscriptions even though its existing portfolio remains invested. It can continue publishing NAVs and allowing eligible redemptions while refusing fresh lump-sum purchases or new SIP registrations.

This has affected several of the seven winning schemes. Nippon India Taiwan Equity Fund stopped accepting certain fresh subscriptions from April 21, 2026. ICICI Prudential suspended fresh lump-sum purchases and new systematic registrations in its Strategic Metal and Energy Equity FoF from March 2, 2026. HSBC Brazil Fund briefly reopened to fresh subscriptions in August before suspending them again effective August 26, while Edelweiss confirmed in October that previously paused SIP and STP registrations in its Emerging Markets Opportunities Equity Offshore Fund would not be reactivated.

Restrictions can differ between new SIPs, existing SIPs, lump-sum investments, switches and redemptions. They may also change when the AMC receives fresh overseas investment capacity. Check the latest scheme-specific AMC notice before attempting a transaction, because an investment button or published NAV does not prove that a fresh purchase will be accepted.

Does This Mean Indian Flexi-Cap and Other Equity Funds Performed Badly?

The study showed a sharp contrast with some familiar Indian equity funds. Over its chosen period, Parag Parikh Flexi Cap Fund declined 6.69%, HDFC Flexi Cap Fund fell 7.08% and SBI Contra Fund declined 9.82%. Meanwhile, HDFC Defence Fund and HDFC Pharma and Healthcare Fund delivered positive returns of 10.42% and 14.44%, respectively. These figures help show how widely returns varied across the sample, but they should not be turned into a simple verdict that international funds are better than Indian funds.

A diversified Indian flexi-cap fund has a different investment purpose from a concentrated Taiwan or AI fund. It can hold a mix of Indian large-, mid- and small-cap stocks according to its mandate and the fund manager's judgment. A specialised international fund is often designed to provide a particular country or industry exposure, which may perform exceptionally well during a favourable cycle and poorly when that cycle reverses. Comparing their one-year returns is useful for describing what happened, but insufficient for deciding which role belongs in a portfolio.

The real danger comes from choosing a fund only after seeing the winner's list. Last Diwali, nobody knew with certainty which seven schemes would finish at the top a year later. An investor choosing the Taiwan fund had to accept the possibility of a semiconductor downturn, just as someone choosing the Brazil fund had to accept country and currency risk. The successful outcome makes those risks easy to forget, even though they were present throughout the investment period.

What Should You Check Before Investing in a High-Return Mutual Fund?

Start with the portfolio, not the performance ranking. Ask which companies, countries and industries will actually determine the fund's future returns, and whether you already have meaningful exposure to them elsewhere. If you hold an S&P 500 fund, a Nasdaq-focused fund and an AI fund, check whether the same large US companies dominate all three. Three fund names do not automatically provide three different sources of diversification, and overlap can turn several seemingly separate investments into one large bet.

Next, judge the return against the right comparison. A Taiwan fund should be examined against its Taiwan-focused benchmark, a Brazil fund against an appropriate Brazilian equity benchmark, and an AI strategy against its relevant technology benchmark. Look beyond the last year to understand longer periods and the size of past declines, while remembering that longer histories do not guarantee future results either. A fund that rises very quickly can also fall much more sharply than an investor expects, and the ability to stay invested through that decline matters.

Then look carefully at costs and structure. A FoF may incur expenses at both the Indian fund level and the underlying fund level, so reading only one expense figure may not tell the whole story. If the FoF holds an India-listed overseas ETF, check whether that ETF's market price is significantly above NAV. If the fund invests directly in overseas shares or through a foreign fund, focus instead on its portfolio, foreign-market risks, currency exposure and the scheme's actual investment rules.

Currency also deserves a simple check. Suppose foreign shares rise by 20% in their local currency and the rupee weakens by 5% against that currency. The gross gain measured in rupees would be about 26%, before costs, because both movements affect the result. If the rupee strengthens, the currency movement can reduce the gain. This means a strong rupee return from an international fund is not always the same as an equally strong gain in the overseas stock market itself.

Finally, account for taxes, access and your investment time horizon. Most of these overseas equity funds do not qualify for the special tax treatment given to equity-oriented funds holding sufficient Indian shares. Under the current non-equity framework, long-term treatment for unlisted international mutual fund units generally requires holding them for more than 24 months; tax treatment can vary with the purchase date and scheme structure. Investors can use mutual fund taxation guide as a starting point, while checking the latest rules and scheme disclosures before redemption.

Should You Invest in the 7 Best-Performing Mutual Funds Since Diwali?

The seven winners demonstrate that a mutual fund's country, industry and structure can matter as much as the movement of the Indian stock market. Their Diwali-to-Diwali returns are worth studying because they reveal how differently Taiwan technology, Brazilian businesses, global metal companies and US growth stocks can behave. They also show why a return number cannot be understood without knowing the investments underneath it.

The useful lesson is not that every investor should find a way into last year's seven winners. It is that a mutual fund's return becomes meaningful only when you understand what produced it, what risks came with it and whether that exposure fits the money you are investing for the future.