Equity funds give fantastic returns. At the same time, there are risks associated with such investments. However, rather than reacting to the market, it makes sense to create a carefully considered long-term strategy, especially when it comes to one's long-term needs.

Every advertisement on a mutual fund carries a warning saying, "Past performance is not an indicator of future performance." Similarly, this article also comes with a warning that the past performance is only to be used as a guide, and not as an indicator of future performance.

Having said that, why do we still end up analyzing past performance? The answer is simple—the past is an indicator of the style, and not of the numbers that a fund will achieve. Which means, if a fund scheme achieved a 34% return in the past year, it does not mean it will get a 34% return next year. However, Franklin India Bluechip always invests in large cap stocks—you analyze past performance to check the style of functioning, not the numbers.

Over the past 10 years, the returns that investors have got in funds like HDFC Top 200, HDFC Equity, Templeton India Growth Fund, Franklin India Bluechip and SBI Contra are really great.

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