Top 5 Performing Funds in the Last 5 Years; Turns ₹5 Lakh into ₹29.47 Lakh with Over 42% CAGR Return

The Indian stock market has faced significant corrections over the last 5 months, with the Sensex and Nifty dropping by up to 14% from their September peaks (as of March 6). The broader market has been hit harder, with the Nifty Small-Cap 100 index tumbling, witnessing significant losses from its all-time high. 

Small-cap mutual funds have been among the worst-hit categories in the short term, underperforming large-cap, mid-cap, flexi-cap, and multi-cap funds. However, a longer-term perspective reveals a different story—small-cap funds have consistently outperformed their peers over five years.

Small-Cap Funds: Short-Term Losses, Long-Term Gains

Market downturns often impact smaller companies more than large-cap stocks, but historical data shows that small-cap funds have delivered some of the highest returns over extended periods. The recent underperformance may be cyclical, and past trends suggest that patience in small-cap investments has been rewarding.

Notably, 3 of the top 5 funds with the best 5-year returns are from the small-cap category, while 2 are sectoral funds. These funds have demonstrated resilience despite temporary setbacks in the market.

Top 5 Funds by 5-Year Returns

Here’s a look at the best-performing mutual funds based on 5-year CAGR returns:

Note: Returns and NAV as of March 6, 2025. Direct funds have been considered. 

Key Takeaways from the Data

1. Small-Cap Funds Dominate – 3 out of the 5 five funds are from the small-cap category, highlighting their potential for high growth over time.
2. Sectoral Funds Show Strength – Infrastructure-focused funds like Quant Infra Fund and ICICI Prudential Infra Fund have also delivered strong long-term returns, benefiting from industry tailwinds.
3. Massive Wealth Creation – The top-performing Quant Small Cap Fund has turned ₹5 lakh into ₹29.47 lakh in 5 years, delivering a 42.56% CAGR.

Final Thoughts

Despite short-term fluctuations, long-term data suggests that small-cap and sectoral funds have been strong wealth creators. While past performance does not guarantee future returns, historical trends indicate that well-managed funds in high-growth sectors have delivered exceptional gains over time.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions. 

Mutual Fund investments in the securities market are subject to market risks, read all the related documents carefully before investing.