Best performing mutual funds in India: Top 5 picks based on 5-year returns

As today marks the end of second quarter for FY26, investors are witnessing one of the most complicated macro landscapes in recent history.

From US-China trade tensions, to a tense situation in the Middle Eastern tensions — have emphasized the volatility in commodity, currency, and equity markets.

In this uncertain climate, mutual funds that marry tactical flexibility with long-term conviction are a choice for investors.

Top fund managers of 2025 are not merely beating benchmarks — they’re managing volatility with conviction.

There is also a change in investor sentiment. There is increasing desire for aggressive, but well-run, high-return schemes — particularly those investing in industries facing boosts from PLI incentives, infrastructure growth, and digitalization.

Here in this editorial, we visit five high return mutual funds along the equity spectrum on the basis of 5 years rolling CAGR, judicious managerial vision, future-oriented allocation, and fine-tuned risk management.

Scheme Name	Absolute (%)	CAGR (%)			Risk Ratios
	1 Year	3 Years	5 Years	10 Years	SD		Sharpe	Sortino
Nippon India Small Cap Fund	12.56	26.29	36.71	22.38	16.25		0.32	0.59
ICICI Pru Infrastructure Fund	16.82	31.78	35.07	17.07	14.12		0.44	0.97
Motilal Oswal Mid Cap Fund	28.59	32.18	34.97	19.77	17.17		0.36	0.66
Edelweiss Mid Cap Fund	24.1	26.7	32.5	19.47	15.8		0.35	0.7
DSP India T.I.G.E.R Fund	15.1	29.82	32.35	17.01	17.31		0.35	0.65
Benchmark – Nifty Midcap 150 TRI	13.41	23.41	24.96	18.22	15.44		0.34	0.69
Nifty Smallcap 250 TRI	11.52	22.68	31.69	15.68	18.79		0.3	0.56
Nifty Infrastructure TRI	10.9	21.84	29.64	12.24	14.49		0.35	0.72

#1 Nippon India Small Cap Fund

Nippon India Small Cap Fund seeks to identify strong fundamental small-cap companies with high growth opportunities, to participate in early-stage opportunities while adopting a disciplined diversification approach, and hence is an attractive candidate for long-term wealth creation.

Over the past 5 years, the fund has provided a rolling CAGR of 36.71%, demonstrating stable risk-adjusted returns and its skill at finding scalable, sound fundamentals within the space of small caps.

As of August 2025, Nippon India Small Cap Fund has assets under its management of Rs 648.21 bn, with 66.9% in small-cap stocks, 14.8% in midcaps, and 11.9% in largecaps.

Top stocks in the portfolio are Multi Commodities Exchange of India (2.1%), HDFC Bank (1.9%), and Kirloskar Brothers (1.3%), showing a portfolio of structural growth narratives in the space of digital transformation, renewable power, and precision engineering.

Sector exposure is dominated by capital goods (11.3%), healthcare (8.4%), and chemicals (8.1%), showing a growth-focused but diversified exposure to domestic manufacturing, consumption, and innovation-driven sectors in the small-cap space.

#2 ICICI Pru Infrastructure Fund

ICICI Prudential Infrastructure Fund looks for quality infrastructure stocks that stand to gain from India’s increasing requirement for strong physical and social infrastructure, blending growth opportunities with a conservative risk structure to create long-term wealth.

Over the past 5 years, the fund has clocked a rolling CAGR of 35.07%, demonstrating consistent, risk-adjusted returns by riding the growth of the increasing infrastructure space, backed by government support and private investment.

As of August 2025, the ICICI Prudential Infrastructure Fund manages assets totalling Rs 76.45 bn.

While nearly 19% of the fund is directly invested in infrastructure, the rest is strategically spread across sectors that support India’s infrastructure growth, such as energy, engineering, and industrials.

The fund’s top holdings—Larsen & Toubro (9.4%), NTPC (4.7%), and Adani Ports and Special Economic Zone (3.8%)—highlight its preference for large, market-leading companies known for strong execution.

Sector-wise, the fund has significant exposure to banking (10.1%), power (8.2%), and crude oil (8.2%), underlining its focus on the key drivers of India’s growth story.

#3 Motilal Oswal Mid Cap Fund

Motilal Oswal Midcap Fund invests in high-quality mid-cap firms with enduring competitive advantages and sound business models to capitalize on their growth opportunities while ensuring disciplined risk management for long-term wealth creation.

Over the past 5 years, the fund has provided a rolling CAGR of 34.97%, which is a consistent risk-adjusted return backed by a bottom-up stock selection methodology focused on sustainable growth prospects in the mid-cap segment.

As of August 2025, Motilal Oswal Midcap Fund has assets under its management worth Rs 347.7 bn with a mid-cap stock base of 76.02% backed by 21.37% in largecaps and 2.6% in smallcaps, maintaining a balance between growth and stability.

Top positions are held by Dixon Technologies (10.1%), Coforge (9.7%), and Trent (9.1%), reflecting its preference for quality companies in chemicals and technology spaces for long-term growth.

Sector exposure is concentrated in IT (27.9%), retailing (18.1%), and electricals (14%), reflecting a diversified strategy with mix of cyclical and secular growth drivers in the mid-cap space.

#4 Edelweiss Mid Cap Fund

Edelweiss Mid Cap Fund targets investment in quality mid-cap firms with high growth visibility and sound fundamentals, with the goal to leverage the budding opportunities in India’s mid-cap space while mitigating risks through diversification and stringent stock selection.

Over the past 5 years, the fund has achieved a rolling CAGR of 32.5%, an indication of its success in delivering risk-adjusted returns by spotting fundamentally strong businesses with sustainable growth.

As of August 2025, Edelweiss Mid Cap Fund holds assets valued at Rs 75.48 bn with 70.2% portfolio holding in mid-cap equities supported by 15.7% in largecaps, and 8.9% smallcap holdings.

Persistent systems (3.1%), Max Healthcare Institute (3%), and Coforge (2.9%) are the top holdings.

Sector exposure is concentrated in finance (14.5%), automobile & ancillaries (10.8%), and healthcare (10.7%), reflecting a diversified strategy with a combination of secular growth themes and cyclical possibilities in the mid-cap space.

#5 DSP India T.I.G.E.R. Fund

DSP India T.I.G.E.R. Fund invests in businesses likely to gain from India’s infrastructure growth and economic reforms. Focusing on a thematic strategy of targeting capital-intensive, reform-driven sectors, the fund looks to generate long-term wealth through structural growth opportunities.

Over the past 5 years, the fund has produced a rolling CAGR of 32.35%, a testimony to consistent performance fueled by exposure to infrastructure, manufacturing, and reform-related sectors, which form an intrinsic part of India’s long-term growth narrative.

As of August 2025, DSP India T.I.G.E.R. Fund has Rs 53.03 bn in assets under management. It is invested in a mix of market capitalizations and sectors that are direct or indirect beneficiaries of India’s growth engine such as engineering, power, transportation, and raw materials with flexibility to fine-tune in light of macroeconomic and policy changes.

Top positions are Larsen & Toubro (4.7%), NTPC (4.4%), and Apollo Hospitals Enterprise (3.5%), showing a heavy preference for execution-intensive and policy-supported firms with consistency of performance.

Sector allocation is heavily in capital goods (12.9%), infrastructure (11.2%), and power (7.45%), reflecting the thematic focus of the fund on infrastructure while being diversified across sectors that are driven by reforms.

Conclusion

The five high-return funds featured here illustrate how rigorous strategy, industry expertise, and opportune asset allocation could result in a solid performance — particularly when backed by macroeconomic forces like domestic policy changes, consumption growth, and infrastructure momentum.

However, high return does not come without risk. Most of these funds entail exposure to mid/small cap stocks, thematic industries, or cyclical sectors — all of which may face higher volatility in global shocks or local slowdowns.

Even top-performing funds need precise entry timing, disciplined monitoring, and mapping to one’s personal financial objectives and risk tolerance.

For investors, the secret is not to pursue returns alone, but to discern the structure and strategy behind them.

In today’s environment — where policy is fluid, interest rates are still high, and global uncertainty lingers — mutual fund choice has to look beyond the past. A solidly balanced portfolio will marry return potential with stability.

High-performing mutual funds could be a potent force in building long-term riches — if and only if they are selected with complete knowledge of the risk that accompanies them.

Happy investing.

Table Note: Data as of September 29, 2025
The securities quoted are for illustration only and are not recommendatory
Past performance is not an indicator for future returns.
Returns are on rolling CAGR basis and in %. Direct Plan-Growth option.
Those depicted over 1-Yr are compounded annualised.
Risk ratios are calculated over a 3-year period assuming a risk-free rate of 6% p.a.

Disclaimer:

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