CPSE ETF tops five-year chart
Leading the pack was the CPSE ETF, which posted an annualised return of 29.96% over five years. The fund invests in a basket of central public sector enterprises spanning sectors such as energy, power and engineering.
Close behind was the Nippon India ETF Nifty PSU Bank BeES, which delivered a 28.76% annualised return. The stellar performance reflects the sharp turnaround in state-owned banks, driven by cleaner balance sheets, lower bad loans, improving profitability and strong credit growth.
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The Mirae Asset NYSE FANG+ ETF, offering exposure to some of the world’s largest technology companies, ranked third with a 24.72% annualised return. The rally in global technology stocks, fuelled by cloud computing, artificial intelligence and digital transformation, continued to reward long-term investors.
The Bharat 22 ETF followed with a 23.49% annualised return, while the Motilal Oswal Nasdaq 100 ETF completed the top five with a 19.52% return.
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Broad-market ETFs trail thematic funds
The contrast with diversified benchmark ETFs is striking. Most ETFs tracking the Nifty 50 generated annualised five-year returns of around 10%. For instance, the ABSL Nifty 50 ETF returned 10.04%, Nippon India ETF Nifty 50 BeES delivered 10.03%, while SBI Nifty 50 ETF generated 10.01% over the same period.
The data suggests that investors who allocated a portion of their portfolios to sectoral or thematic ETFs were able to significantly outperform traditional index investing over the past five years.
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PSUs and global tech dominate
The outperformance of CPSE, Bharat 22 and PSU Bank ETFs reflects one of the biggest investment themes in India’s equity markets in recent years. Government-owned companies have benefited from improving corporate governance, higher profitability, robust dividend payouts and renewed investor confidence, resulting in a sharp re-rating of many public sector stocks.
At the same time, international technology-focused ETFs gained from the exceptional performance of US technology giants, with artificial intelligence emerging as a key driver of earnings growth and market valuations.
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Lessons for long-term investors
While several of these ETFs have witnessed sharp swings in 2026, the five-year returns underscore the benefits of remaining invested through market cycles. The data also highlights that diversification across geographies and investment themes can meaningfully enhance long-term portfolio returns.
Financial advisers, however, caution that thematic and sectoral ETFs typically carry higher volatility than diversified index funds. Investors should therefore align such allocations with their risk appetite, investment horizon and overall asset allocation strategy rather than chase recent winners.
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