Should one build mutual fund investment portfolio based on return only?

Is there anything wrong with the idea of investing in those mutual funds which have given highest return in say last 3/5 years? I do not understand why people worry about selecting diversified equity fund or debt fund; about large cap or mid cap fund. After all what matters is the return, so one should select those funds which have proven track records of better returns than others and select those with maximum returns. Is this idea wrong?

How does one build a good portfolio of mutual funds?

I am 33 years and unfortunately have started investing in mutual funds without learning the details. I just looked for the funds which have given good returns for last 3-5 years and are of low risk category (according to some websites where I could compare performances). Now I understand there is a lot to understand before investing in mutual funds. I have started SIP in HDFC Top200, hdfc-prudence, idfc prem eqity-A, birla sunlife dividend yield plus, uti dividend yield, hdfc taxsaver, sbi magnum taxgain in ratio– 3:1:2:1:2:2:2 (all in growth option, except taxgain, which is dividend reinvestment). I have not made detailed plan for generation of money for future but thought that in any case the ultimate aim is to accumulate enough money for purchasing a flat, provide for educational expenses for my child and his marriage, and to have enough for my (and for my wife) retired life. I will retire at 60yrs. Each month I can invest about 15k(excluding provident fund where I save 3k permonth). Given this, can you tell me whether my current portfolio is good or bad? What changes are required?
Also after continuing SIP for 9 months, I find performance of magnum taxgain not that good. So I am considering to stop that. However some people advise that instead of chasing return, one should consider longterm prospect. I am confused: should I discontinue magnum taxgain or not?
I have started reading one book (though it explains MFs less and stocks more), but hope others here will help me gain some insight. Thanks.