Best thematic factor-based mutual funds 2026: Which equity schemes lead in 1-, 3- and 5-year CAGR returns?

Factor-based mutual funds use strategies such as momentum, quality and low volatility to select stocks. We compare the leading schemes by 1-year, 3-year and 5-year returns and examine which strategies top each period.

Factor-based mutual funds follow specific investment characteristics, or factors, to select stocks rather than relying solely on a broad market outlook or a conventional market-cap-based approach.

These factors can include momentum, quality, low volatility, and alpha. Investors can access these strategies through actively managed funds as well as passive index funds and exchange-traded funds (ETFs).

Momentum strategies invest in stocks that have demonstrated relatively strong price performance, betting that the trend may continue. Quality strategies focus on companies with characteristics such as consistent earnings, sound balance sheets, and efficient use of capital.

Low-volatility strategies aim to select stocks that have historically experienced smaller price fluctuations than the broader market. Alpha-based strategies seek to outperform a benchmark through a defined stock-selection approach, while some indices combine multiple factors.

Different factors can perform well or poorly across market cycles, and a strategy that leads over one period may lag over another. Here is how the leading schemes compare across 1-year, 3-year, and 5-year returns.

Which factor-based mutual funds have delivered highest 1-year returns?

*Source: Value Research, Direct plans, Returns as on 16 October 2026