Top 10 mutual funds by 5-year SIP returns are out. One popular category is missing.

Register FREE

If someone had asked you five years ago to pick just one mutual fund for your SIP, would you have chosen one of today’s biggest winners?

The latest data shows only a handful of equity schemes managed to consistently stay ahead of their peers, delivering annualised SIP returns of over 20%. But beyond the rankings, the list tells a bigger story about the Indian equity market. Small-cap and mid-cap funds dominate the leaderboard, while actively managed large-cap funds are nowhere to be seen.

Rather than focusing on individual winners, the rankings reveal three clear trends.

1. Small caps and mid caps ruled the last five years

Nine of the 10 best-performing funds belong to either the small-cap or mid-cap category. Four are small-cap schemes, while five are mid-cap funds. The only exception is SBI Children’s Fund, which follows a flexi-cap strategy.

This suggests investors who were willing to take on more risk through the broader market were rewarded over the past five years. As smaller companies outperformed during much of this period, actively managed small- and mid-cap funds generated significantly stronger SIP returns than their large-cap counterparts.

2. These aren’t one-hit wonders

Another interesting pattern is consistency.

The funds on the leaderboard aren’t just among the best performers across all equity funds—they also occupy the top positions within their own categories. Bandhan Small Cap Fund ranks first among 26 small-cap funds, while ITI, Invesco India Smallcap and Bank of India Small Cap occupy the next three positions.

The same trend is visible in the mid-cap space, where Invesco India Mid Cap, HSBC Midcap, Edelweiss MidCap, ICICI Prudential Midcap and Mahindra Manulife Mid Cap all feature among the top five funds in their category.

That suggests these weren’t isolated bursts of outperformance but sustained performance relative to peers.

3. Active large-cap funds are missing – and that says something

Perhaps the biggest takeaway is what’s missing from the list.

Not a single actively managed large-cap fund features among the top 10 SIP performers.

In fact, the best-performing active large-cap scheme was Invesco India Largecap Fund, which generated an annualised SIP return of 14.27% over the last five years. It ranked 10th among 64 large-cap funds, while its three-year SIP return stood at 11.58%.

Even more interesting, the top nine positions in the large-cap category were occupied by index funds and ETFs, highlighting how passive investing has continued to challenge active fund managers in the large-cap space.

What should investors do with this information?

The rankings make for interesting reading, but they shouldn’t become a shopping list.

Small-cap and mid-cap funds have been the biggest wealth creators over the last five years, but they have also been among the most volatile categories. Their strong performance came during a favourable market cycle and may not be repeated over the next five years.

Instead of chasing yesterday’s winners, investors should first decide how much risk they are comfortable taking. A fund’s long-term consistency, portfolio strategy and suitability for one’s financial goals matter far more than where it sits on a leaderboard.

Disclaimer: The views and investment tips expressed by experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.