Introduction
You may have seen or heard about mutual funds in India, and rightly so. They are a great way to build your wealth through diverse holdings in equities, debt, or hybrid vehicles. During the 5 years, India's financial markets experienced ups and downs, such as the recovery of the COVID-19 pandemic, geopolitical tensions, spikes in inflation, and an exuberant bull run fuelled by digital and infrastructure spending. Despite this volatility in the markets, equity mutual funds shone through with CAGRs (Compounded Annual Growth Rates) of 25-30% and higher over the 5 years. This not only shows India's economic strength but is also a reflection of great professional fund management.
If you are seeking long-term sustainable growth, equity funds have significantly outperformed fixed-income or fixed-return holders, particularly with declining interest rates and a big stock market rally. Within the equity universe, small-cap and mid-cap funds led the way as managers allocated capital to undervalued sectors and equities like technology, healthcare, and consumer staples. However, higher returns come with volatility, so be sure to assess risks before making any decisions.
Open your Trading Account today!
Below is the list of Top Performers
Quant Small Cap Fund
With a 5-year CAGR of 33.57%, the Quant Small Cap Fund takes the lead here, utilising smart quantitative models to identify and invest in undervalued small-cap companies primarily in industrials and financials. The fund is managed by Quant AMC and has over ₹22,000 crore in AUM, while demonstrating a strong ability to withstand market declines as well.
If you’re a risk-taking investor, you could consider investments like Tube Investments of India that the Quant Small Cap Fund is invested in.
ICICI Prudential Infrastructure Fund
With a CAGR of 38.55%, this fund has benefited by focusing on the central government’s ₹100 lakh crore stimulus and investments into Indian infrastructure. Primarily invested in the construction and energy space, which is diversified into renewable energy projects as well, the ICICI Prudential Infrastructure Fund has over ₹6,000 crore in AUM.
This fund could be a good fit for investors who want thematic investments in Indian infrastructure but have a higher risk tolerance with their investments. Shares of Larsen & Toubro are among the top holdings of the fund.
Bandhan Small Cap Fund
With a CAGR of 32.72%, Bandhan Small Cap Fund is performing well with stock selections in auto ancillaries and IT services. It was launched in 2020 and has grown to ₹10,000 crore AUM with a concentrated portfolio of 50-60 stocks. Its strong performance in 2022, when the market fell sharply, suggests it is a great option for you if your priority is risk management.
Motilal Oswal Large and Midcap Fund
With a CAGR of 30.4%, this fund offers the best of both worlds with stability from large-caps (65% of the overall fund) and growth from mid-caps. Given its QGLP (Quality, Growth, Longevity, Price) investment philosophy, it can provide more stability while providing a higher return. It has an AUM of ₹5,000 crore and is an excellent fund for you if you have moderate risk tolerance and aim for 25%+ return.
Invesco India Small Cap Fund
The fund's return of 29.9% CAGR has come from excellent stock selection in the consumer durables and healthcare sectors, which have received a boost from rising discretionary incomes. Invesco India Small Cap Fund has nearly ₹5,000 crore AUM and allows diversification as it is an established fund house with global experience. Examples of stocks like KEI Industries provide exposure to the manufacturing renaissance going on in India.
SBI Contra Fund
SBI’s Contra Fund contrarian approach delivered a 29.17% CAGR by snapping up undervalued stocks like PSU banks during market lows. With ₹40,000 crore AUM, it’s a trusted pick if you’re patient and believe in undervalued sectors like metals and FMCG bouncing back.
Edelweiss Mid Cap Fund
At 28.94% CAGR (and 32.5% rolling), Edelweiss mid-cap fund targets high-growth mid-caps in tech and autos. Its ₹7,500 crore AUM benefits from a focused 40-stock portfolio. With recent picks like Max Healthcare, boosting healthcare exposure to 10%. It’s a great fit if you’re after momentum.
Nippon India Large Cap Fund
If you are looking for something less aggressive in the equity space, the Nippon Large Cap is another good option. It has a 27% CAGR, vintage, and combines mega-caps, such as HDFC Banks, with cyclical stocks. It has an AUM of ₹45,000 crores and, over the last 10 years, has provided a steady return of almost 16%. It is good if you are a retiree or someone getting some disciplined rebalancing done.
Some Takeaways on Your Investment Journey
These funds demonstrate how mutual fund investing in India can really help you create wealth, as India is experiencing its growth story. A SIP of ₹1 lakh in one of the better funds mentioned could yield ₹3-4 lakh over five years. Diversifying across 3-5 funds will also help to manage risk related to volatility in small caps. There is anticipation of rate cuts from the RBI and fiscal stimulus in 2025, which may mean that mid- and small caps will continue to outperform. However, you will find that large caps may provide some stability.
Before investing, use the SEBI’s riskometer to test for your own risk appetite. You should speak to a certified financial advisor. Systematic Investment Plans (SIPs) of ₹5,000 monthly can supercharge your compounding. Don’t forget taxation, long-term capital gains (LTCG) at 12.5% apply on gains over ₹1.25 lakh after a year. With India’s market eyeing a $5 trillion milestone by 2027, these funds highlight the rewards of disciplined investing for you.
Explore more: Top Index Mutual Funds to invest in 2025 | Top Mid-Cap Mutual Funds in 2025 | Top Mutual Funds to start a SIP in 2025