The past five years have been a testament to the resilience of equity mutual funds in India, particularly in the mid-cap and small-cap segments, as investors navigated both strong market rallies and periods of heightened volatility. Markets witnessed a sharp post-pandemic rally, interspersed with phases of consolidation, geopolitical uncertainties, inflationary pressures, and intermittent corrections. In such an environment, Systematic Investment Plans (SIPs) have emerged as one of the most effective wealth-creation tools, enabling investors to remain invested through market cycles rather than attempting to time short-term market movements.
Here are some of the best-performing equity mutual funds over the last five-year period:
| Schemes | 5 Year Returns |
| Motilal Oswal Midcap Fund | 23.40% |
| Invesco India Mid Cap Fund | 21.50% |
| Bandhan Small Cap Fund | 21.20% |
| Invesco India Smallcap Fund | 21.10% |
| Nippon India Growth Mid Cap Fund | 20.80% |
| Nippon India Small Cap Fund | 20.30% |
| * CAGR Returns as of July 13, 2026 | Excluding Sectoral Funds | Source: Value Research | Direct Plans | |
CAGR Returns as of 13th July 2026 | Excluding Sectoral Funds | Source: Value Research | Direct Plans
Power of compounding
A Rs 10,000 monthly SIP in these funds over the past five years would have grown to an estimated Rs 10-11 lakh, against a total investment of Rs 6 lakh, highlighting the power of disciplined investing and long-term compounding.
According to Aditya Agrawal, CFA, Chief Investment Officer at Avisa Wealth Creators, the biggest advantage of SIPs is that they eliminate the need to time the market.
“By investing a fixed amount every month, investors benefit from rupee-cost averaging, buying more units during market declines and fewer when markets are expensive. This disciplined approach helps navigate volatility while building wealth over time,” Agrawal said.
What should investors keep in mind?
However, investors should avoid selecting funds solely based on historical returns. The strong performance over the last five years was supported by economic recovery, abundant domestic liquidity, improving corporate earnings, and rising retail participation.
“Rather than chasing recent winners, investors should focus on funds with a consistent investment philosophy, experienced fund managers, sound portfolio construction, reasonable costs, and a proven track record across market cycles,” Agrawal added.
Equally important is maintaining an asset allocation aligned with one’s financial goals, investment horizon, and risk appetite.
The key lesson from the past five years is clear: long-term wealth creation is driven by disciplined SIP investing, diversification, and the power of compounding – not by trying to predict market highs and lows.
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(This article is for informational purposes only and should not be construed as investment, financial, or other advice.)