If you’re looking at SBI equity mutual funds, returns alone shouldn’t drive the decision. Costs, consistency, and risk-adjusted performance matter just as much.
For this story, we have shortlisted SBI funds based on a mix of practical parameters — low expense ratios, five-star ratings from Value Research, and strong three-year CAGR performance — to identify schemes that have delivered solid returns without being heavy on costs.
Top 3 cheapest SBI mutual funds in 3 years
Below are the three SBI equity mutual funds that have delivered strong long-term returns with a relatively low expense ratio.
| Funds | Rating | Return in % | Rs 1 lakh turns to | SIP return in % | Rs 10k per month turns to | Expense ratio |
| SBI Contra Fund Direct Growth | 5-star | 16.76 | 1,59,198 | 5.66 | 3,91,487 | 0.73 |
| SBI Healthcare Opportunities Fund Direct Plan Growth | 5-star | 28.01 | 2,09,760 | 18.35 | 4,68,594 | 0.92 |
| SBI ELSS Tax Saver Fund Direct Growth | 5-star | 20.17 | 1,73,528 | 7.81 | 4,03,911 | 0.98 |
| Source: valueresearchonline.com |
SBI Contra Fund Direct Growth
SBI Contra Fund is one of SBI Mutual Fund’s oldest equity schemes, launched in July 1999, and is currently managed by Dinesh Balachandran. The fund follows a contrarian investing strategy, which means it invests in fundamentally strong companies that may currently be undervalued or overlooked by the market, with the aim of generating long-term capital gains when sentiment improves.
Key highlights
- Invests across large-cap, mid-cap, and select small-cap stocks for diversification
- Direct plan expense ratio is around 0.73%, making it relatively cost-efficient compared to many actively managed equity funds
- Has exposure to sectors such as financial services, oil & gas, healthcare, IT, and metals
Top holdings: The fund’s major investments include HDFC Bank, Reliance Industries, Biocon, Tata Steel, and ICICI Bank.
Who should consider it?
Since contra funds invest against prevailing market trends, they can witness higher short-term volatility. However, the scheme may suit investors with a long-term investment horizon and a moderate to high risk appetite who are looking to diversify their equity portfolio.
Risk profile
SBI Contra Fund Direct Growth is classified as a Very High Risk fund, which means investors should be prepared for market fluctuations in the short term. It may be better suited for those with a long-term horizon and higher risk appetite.
Key metrics at a glance
Mean return: 17.26%
Standard deviation: 14.50% (shows return volatility)
Sharpe ratio: 0.78 (risk-adjusted return measure)
Sortino ratio: 1.01 (measures downside risk-adjusted returns)
Beta: 0.91 (slightly less volatile than the broader market)
Alpha: 2.89 (indicates outperformance over benchmark)
SBI Healthcare Opportunities Fund Direct Plan Growth
SBI Healthcare Opportunities Fund is a sectoral mutual fund that primarily invests in the healthcare space, making it a focused bet on one sector rather than a diversified equity fund. The scheme invests at least 80% of its corpus in healthcare and related companies, while the remaining portion may be allocated to debt, money market instruments, or stocks outside the healthcare sector.
Key highlights
- Managed by Tanmaya Desai since June 2011
- Benchmarked against the BSE Healthcare Index
- Direct plan expense ratio is under 1%, making it relatively cost-efficient compared to many actively managed sectoral funds
- Exit load of 0.50% if units are redeemed within 15 days of allotment
Top sectors and holdings: The fund’s portfolio is concentrated in sectors such as healthcare, consumer services, and chemicals, along with some allocation to cash and sovereign instruments. Its major holdings include Sun Pharmaceutical Industries, Divi’s Laboratories, Acutaas Chemicals, Apollo Hospitals, Max Healthcare, and Aster DM Healthcare.
Who should consider it?
Since this is a sector-specific fund, returns can be closely linked to the performance of the healthcare sector. It may be suitable for investors with a high risk appetite and a long-term investment horizon who want targeted exposure to the healthcare theme rather than broad market diversification.
Risk Profile
SBI Healthcare Opportunities Fund is classified as a Very High Risk fund, as it is a sector-focused scheme and can see sharp swings depending on how the healthcare sector performs. It may suit investors with a high risk appetite and a long-term horizon.
Key metrics at a glance
Mean return: 24.57%
Standard deviation: 14.84% (shows volatility in returns)
Sharpe ratio: 1.26 (stronger risk-adjusted returns)
Sortino ratio: 2.09 (better downside risk-adjusted performance)
Beta: 0.85 (less volatile than the broader market)
Alpha: 3.01 (indicates outperformance over benchmark)
SBI ELSS Tax Saver Fund Direct Growth
SBI ELSS Tax Saver Fund is an equity-linked savings scheme (ELSS) that combines wealth creation potential with tax-saving benefits. Under the old tax regime, investments of up to Rs 1.5 lakh in this fund can qualify for a deduction under Section 80C of the Income Tax Act. One of its biggest advantages is the mandatory lock-in period of just three years, which is shorter than many other tax-saving options, such as PPF, tax-saving fixed deposits, and ULIPs.
Key highlights
- At least 80% of the portfolio is invested in equities and equity-related instruments, with the rest allocated to money market instruments
- Managed by Dinesh Balachandran since September 2016
- Direct plan delivered annualised returns of around 21% in three years and nearly 20% in five years
- Has outperformed its benchmark BSE 500 TRI over these periods
- Since its launch in 1993, the scheme has delivered annualised returns of around 16%
Portfolio details
The fund has exposure to sectors such as financial services, capital goods, IT, metals and mining, oil & gas, and healthcare. Its top holdings include ICICI Bank, Reliance Industries, Kotak Mahindra Bank, Tata Steel, Axis Bank, and HDFC Bank.
Who should consider it?
This fund may suit investors looking to save tax under the old regime while building long-term wealth through equity exposure. However, as with all ELSS funds, investors should be comfortable with market-linked risks and the compulsory three-year lock-in period.
Risk profile of SBI ELSS Tax Saver Fund Direct Plan
SBI ELSS Tax Saver Fund is classified as a Very High Risk fund, as it invests primarily in equities. While it offers tax-saving benefits under the old tax regime, investors should be comfortable with market volatility and the mandatory three-year lock-in period.
Key metrics at a glance
Mean return: 20.85%
Standard deviation: 15.67% (shows return volatility)
Sharpe ratio: 0.95 (indicates risk-adjusted returns)
Sortino ratio: 1.24 (measures downside risk-adjusted performance)
Beta: 0.98 (moves largely in line with the broader market)
Alpha: 5.84 (shows strong outperformance over benchmark)
A word of caution for investors
Past performance is not a guarantee
While these funds have delivered strong returns in the past few years, investors should remember that past performance does not guarantee similar returns in the future. Mutual fund returns are linked to market movements, economic conditions, interest rates, and sector performance, all of which can change over time. A fund that has outperformed in one phase may underperform in another.
Don’t rely only on ratings and low costs
A five-star rating or a low expense ratio can be useful starting points, but they should not be the only factors driving your investment decision. Ratings can change over time as fund performance shifts, and a cheaper fund is not automatically the right fund for every investor.
Other factors that matter
Before investing, also look at the fund’s investment strategy, risk level, portfolio quality, asset allocation, fund manager’s track record, consistency of returns across different market cycles, exit load, lock-in period (if any), and whether the fund matches your financial goals and investment horizon. Choosing a mutual fund should be based on suitability, not just recent returns.
Disclaimer:
This article is for informational purposes only and should not be considered investment advice. Mutual fund investments are subject to market risks. Past performance is not indicative of future returns. Investors are advised to consult a financial advisor before making investment decisions.