Index funds, which track market indices like Nifty 50, Nifty Next 50, Nifty 500, and more, have gained popularity among investors due to their low costs, passive investment strategy, and potential to build wealth over the long term.
Index fund AUM (assets under management) climbed 7.7% month-on-month to Rs 3,31,057 crore in April 2026. Index funds logged monthly inflows of Rs 4,626 crore during the month of April, according to AMFI data.
In this article, we have picked the top 3 index mutual funds that have delivered annualised SIP returns of up to 17% over the past five years, according to Value Research data.
Top 3 mid-cap index funds with up to 17% XIRR in 5 years
These three funds carry a 3-star rating but have still delivered SIP returns of more than 16% over five years.
| Fund name | 5 years SIP returns in % | Monthly SIP of Rs 10,000 has grown to (approx) | Expense ratio | Rating |
| Motilal Oswal Nifty Midcap 150 Index Fund Direct Growth | 16.63 | Rs 9,09,872 | 0.25% | 3-star |
| Aditya Birla Sun Life Nifty Midcap 150 Index Fund Direct Growth | 16.48 | Rs 9,06,583 | 0.40% | 3-star |
| Nippon India Nifty Midcap 150 Index Fund Direct-Growth | 16.40 | Rs 9,04,760 | 0.29% | 3-star |
| Source: Value Research |
Motilal Oswal Nifty Midcap 150 Index Fund – Direct Plan
Launched on September 6, 2019, the fund is currently managed by Swapnil P Mayekar, Rakesh Shetty, and Dishant Mehta. With an asset allocation of 100.13% in equity and -0.13% in cash and cash equivalents (CCE), the scheme tracks the benchmark Nifty Midcap 150 Index.
Top 10 holdings: BSE, MCX, Federal Bank, Suzlon Energy, Hero Motocorp, IndusInd Bank, AU Small Fin Bank, PB Fintech, Lupin, GE Vernova T&D.
Top 5 sector exposure: Financial, Industrials, Consumer Discretionary, Technology and Healthcare.
Risk profile: The fund has a very high risk profile, as indicated by the high standard deviation of 18.34%. However, the fund’s beta of 1.00 shows that it moves exactly in line with its benchmark. A Sortino ratio of 1.12 indicates that the fund has delivered reasonable risk-adjusted returns relative to the risks taken.
Aditya Birla Sun Life Nifty Midcap 150 Index Fund – Direct Plan
Launched on April 1, 2021, this mid-cap fund is currently managed by Priya Sridhar and tracks its benchmark Nifty Midcap 150 Index. The fund’s asset allocation consists of 0.14% CCE and 99.86% equity.
Top 10 holdings: BSE, MCX, Federal Bank, Suzlon Energy, Hero Motocorp, IndusInd Bank, AU Small Fin Bank, PB Fintech, Lupin, and GE Vernova T&D.
Top 5 sector exposure: Financial, Industrials, Consumer Discretionary, Technology, and Healthcare.
Risk profile: Since it replicates the Nifty Midcap 150 Index, which is made up of mid-cap companies, the fund has a very high risk profile. The fund has produced a robust mean return of 21.48%, above the benchmark’s 20.99%, despite the higher volatility. The fund has produced comparatively strong risk-adjusted returns, as shown by the Sortino ratio of 1.11, whereas the fund runs in tandem with its benchmark as indicated by its beta of 1.00.
Nippon India Nifty Midcap 150 Index Fund – Direct Plan
In terms of 5-year SIP returns, the fund ranks third on our list. Himanshu Mange is now in charge of this mid-cap fund, which was introduced on February 19, 2021. The asset allocation of the fund that tracks the Nifty Midcap 150 Index is -0.05% in CCE and 100.05% in equity.
Top 10 holdings: BSE, MCX, Federal Bank, Suzlon Energy, Hero Motocorp, IndusInd Bank, AU Small Fin Bank, PB Fintech, Lupin, and GE Vernova T&D.
Top 5 sector allocation: Financial, Industrials, Consumer Discretionary, Technology, and Materials.
Risk profile: Similar to the mid-cap funds mentioned above, this fund has a very high risk and might not be appropriate for conservative investors. The index fund’s standard deviation of 18.31% indicates that it is extremely volatile, but despite its high risk profile, the fund’s Sortino ratio of 1.11 indicates that it has produced steady returns relative to the downside risk it has taken.
Who should invest in index funds?
In recent years, there has been a growing popularity of passive investing, however, before investing in index funds, investors should understand the purpose of indices; they primarily exist to track the performance of a market segment and act as benchmarks, but not as investment products, and when it comes to index funds, they simply aim to replicate the underlying index in terms of portfolio composition and returns. As a result, they become inefficient in outperforming the benchmark or generating alpha.
Additionally, one more challenge with index investing is that indices typically undergo portfolio rebalancing only once every three to six months, depending on the underlying rules of the index, which results in missed opportunities during evolving market changes.
Mukesh Kumawat, Director, Anand Rathi Wealth, says we suggest that index fund investing is not suitable for any kind of investor, as they are designed to mirror market performance rather than outperform it. However, for investors who are just beginning their investment journey with small SIP amounts, like with 500 or 1,000 per month, they can consider index funds as a starting point, and once they gain experience & their investment corpus grows, they can gradually shift towards active diversified equity funds.
For long-term wealth creation and substantial corpus building, investors should choose active diversified funds as they aim to outperform the market through active stock selection and portfolio management based on research.
“Thus, for investors, the best is to create a strategy-based portfolio through diversification across active diversified equity categories like market-cap-based funds and strategy-based funds like value, contra, focused, and dividend yield. This helps to ride across market cycles and generate 2 to 3% consistent alpha in the long term, which helps to build substantial wealth over the long term,” said Mukesh Kumawat.
Disclaimer: This article is for informational purposes only and should not be construed as investment advice. Mutual fund investments are subject to market risks. Please read all scheme-related documents carefully before investing.
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