5 Best-Performing Equity Mutual Funds in August 2026
Across 194 diversified equity schemes with a 5-year track record, the best one returned 22.26% a year and the worst 5.04%.
That’s a gap of more than 17% in a year, compounded over five years, between two funds that are both actively managed, both sold by established fund houses, and both investing in Indian equities.
Here’re the 5 names at the top, ranked on 5-year compound annual returns as of 2 September 2026.
#1 Motilal Oswal Midcap Fund
First on the list is Motilal Oswal Midcap fund.
It has the best 5-year record of any diversified equity fund in India at 22.26% a year, against 17.06% for the Nifty Midcap 150 TRI. That is 5.19 percentage points of annual outperformance.
It’s also the largest fund on this list of 5 schemes, with around Rs 400 billion (bn) under management, and the most concentrated.
The mandate allows a maximum of 30 stocks, and the fund has run close to that limit, with the top five holdings accounting for roughly a third of the portfolio.
Concentration produced this record and has recently cost it. The fund held close to a fifth of its portfolio in information technology, with Coforge alone at 9.6%.
When mid-tier IT sold off on artificial intelligence concerns, Coforge fell over 40% and the fund spent much of the past year at the bottom of its category.
It has since recovered, with the 1-year return turning positive again.
The other point is a change is its management. Niket Shah ran the fund from July 2020 and built almost all of this record before moving to a group role in January 2026. Ankit Agarwal now runs it.
So the fund at the top of this table follows an investing strategy that is currently being rebuilt.
#2 Bank of India Small Cap Fund
Second is Bank of India Small Cap fund.
It’s the most surprising one on the list, and the smallest by a wide margin.
The fund has returned 20.76% a year over five years against 16.13% for the Nifty Smallcap 250 TRI, a margin of 4.63 percentage points.
It manages about Rs 28.2 bn and charges 0.4% on the direct plan, which is among the lowest here.
The small AUM size is a genuine advantage in small caps. A fund this size can take a meaningful position in a genuinely small company without moving the price against, which a Rs 300 bn fund simply cannot.
Its holdings reflect that, spanning names like Sky Gold and Diamonds, City Union Bank, Wockhardt, Quality Power Electrical Equipments, and CAMS.
But the trade-off shows in the risk numbers. Its volatility of 20.16 is the highest of these five and higher than the small cap index at 19.98.
This suggests that this fund did not get its returns by being careful. It got them by being small, early and willing to sit through the swings.
#3 Invesco India Smallcap Fund
Third on the list is Invesco India Smallcap Fund.
At 20.73% per annum, just four basis points behind the fund above it, it arrives at the final line far more efficiently.
Its volatility of 18.77 is below Bank of India’s 20.16 and below the small cap index as well. Its Sharpe ratio of 0.29 and Sortino of 0.54 are better than the benchmark’s 0.19 and 0.35. Overall, it has given nearly the same return as BOI Small Cap, with a noticeably smoother ride.
The direct plan expense ratio of the fund is at 0.39% which is the lowest of the five. Taher Badshah manages the fund.
This fund also appeared in our earlier screen of small cap schemes on rolling returns, where it was the only fund to beat its benchmark over one, three, five, and seven-year rolling periods.
Consistency of that kind, across every horizon rather than one flattering window, is the closest thing to evidence of process in fund data.
#4 Invesco India Midcap Fund
Fourth on the list is Invesco India Midcap.
It has the best risk-adjusted performance of the five, and by some handsome margin. It returned 20.65% a year with a Sharpe ratio of 0.32 and Sortino of 0.59, both the highest on this page.
Its volatility of 18.24 is the lowest of the five. Set against the Nifty Midcap 150 TRI’s Sharpe of 0.24, this fund converted risk into return more efficiently than the index, and the others funds here.
Motilal Midcap Fund returned 1.6 percentage points more per year with a Sharpe ratio of 0.25, a fraction above the benchmark. In contrast, Invesco gave up a little return and delivered a materially better experience for the risk taken.
Invesco Midcap currently manages about Rs 138 bn at an expense ratio of 0.75%, under Aditya Khemani, who joined from HSBC AMC and has been with Invesco since 2007.
The fund was launched in April 2007, giving it a longer record through more market cycles than most of this group.
#5 Quant Small Cap Fund
Last on the list is Quant Small Cap.
It has the most distinctive process here and the weakest risk-adjusted numbers. Quant returned 20.44% a year over five years, comfortably ahead of the small cap benchmark.
But its Sharpe ratio of 0.22 is the lowest of the five and its Sortino of 0.44 the second lowest, meaning it took more risk per unit of return than every fund above it.
The fund runs on Quant’s VLRT framework, which stands for valuation, liquidity, risk appetite and time, and is managed by a seven-member team led by Sandeep Tandon.
In practice this produces high portfolio turnover and rapid shifts in sector positioning, which is the opposite of the buy-and-hold approach most funds on this list describe. It also manages about Rs 341 bn, the second largest here, which is a lot of money to move quickly in small cap stocks.
High turnover carries transaction costs that do not appear in the expense ratio of 0.62%, and executing rapid shifts at this scale in illiquid names is harder than doing it with a tenth of the assets.
This is the fund on this list where the process matters most to whether you should own it. It works, but it works differently, and it is not for someone who checks their portfolio often.
Snapshot of the Five Funds
Here’s a table showing numbers of each of these side by side:
| Scheme | 5-year CAGR | Volatility | Sharpe | Sortino |
|---|---|---|---|---|
| Motilal Oswal Midcap Fund | 22.26% | 19.31 | 0.25 | 0.46 |
| Bank of India Small Cap Fund | 20.76% | 20.16 | 0.26 | 0.49 |
| Invesco India Smallcap Fund | 20.73% | 18.77 | 0.29 | 0.54 |
| Invesco India Midcap Fund | 20.65% | 18.24 | 0.32 | 0.59 |
| Quant Small Cap Fund | 20.44% | 18.29 | 0.22 | 0.44 |
| Nifty Midcap 150 TRI | 17.06% | 16.19 | 0.24 | 0.45 |
| Nifty Smallcap 250 TRI | 16.13% | 19.98 | 0.19 | 0.35 |
Source: Ace MF. Risk ratios for the period 2 September 2023 to 2 September 2026
Three of these five carry volatility below their benchmark while beating it on return, which is the combination worth looking for.
Here’s how you can use this list:
First, check whether the fund beat its own benchmark rather than other funds. Half the mid cap category did not, despite mid caps being the best place to have been invested.
Second, check volatility alongside return. Two funds two percentage points apart can be very far apart on how it felt to hold them, and the calmer one is usually the one investors actually stay in.
Third, check whether the person who produced the record still runs the fund, and whether the portfolio that produced it still exists.
Conclusion
The five best performing equity funds over the past five years are all mid cap and small cap schemes.
Within that group, the rankings shift depending on what you measure.
Motilal Oswal leads on return and trails on risk-adjusted return. Invesco India Midcap is fourth on return and first on efficiency. Bank of India delivered the second-best return from the smallest asset base. Quant got there with the most aggressive process and the least to show for the risk.
The list as a whole reflects a period in which mid and small caps outperformed heavily. This does not mean those categories will lead the next five years.
Evaluate the scheme’s investment mandate, the fund manager’s track record, costs, portfolio composition, and your asset allocation and risk tolerance before taking any investment decisions.
Happy investing.
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