🌎 Market Context: How We Got Here

From 2022 to 2025, Indian equity markets witnessed a remarkable bull run driven by a blend of domestic macroeconomic resilience, sectoral reforms, capex revival, and booming retail participation. The economy navigated global volatility well, and government initiatives in manufacturing, infrastructure, and digitalization further created fertile ground for corporate earnings growth. Within this context, a rare cohort of 14 equity mutual funds delivered more than 30% CAGR over three years — a feat that significantly outpaces benchmark indices and category averages.

This article explores each of these funds in detail, offering insights into their investment styles, risk profiles, and suitability for investors.

📊 Quick Snapshot: Top Performers

1) Motilal Oswal Midcap Fund

Motilal Oswal Midcap Fund delivered a category-leading CAGR of 35.39% over three years, driven by its high-conviction, focused portfolio strategy. The fund follows the QGLP (Quality, Growth, Longevity, and Price) framework, emphasizing companies with high return on equity, earnings visibility, and scalable business models. Its sectoral allocations lean heavily toward domestic cyclicals like capital goods, auto ancillaries, and housing-related plays. The fund typically holds a concentrated basket of 25–30 stocks, resulting in a high tracking error and potential for alpha. The disciplined buy-and-hold approach supports long-term compounding. Given its aggressive tilt and volatility, the fund is best suited for seasoned investors with a high risk appetite and a long-term view of at least 5–7 years.

2) Bandhan Small Cap Fund

Bandhan Small Cap Fund closely follows with a 3-year CAGR of 35.18%. The fund focuses on discovering emerging leaders in the small-cap space, many of which evolve into mid-caps over time. It maintains a diversified portfolio with over 60 stocks, balancing high growth potential with risk mitigation. The fund’s active management style is evident in its regular rebalancing and preference for early-stage sector leaders. Recent beneficiaries include defence contractors, textiles, chemicals, and consumer durables. The fund’s flexibility allows it to capitalize on domestic manufacturing and infrastructure tailwinds. Ideal for investors seeking high returns with the patience to ride out interim volatility.

3) Motilal Oswal Large & Midcap Fund

Motilal Oswal Large & Midcap Fund returned 33.64% CAGR, positioning itself as a strong blend of stability and growth. This fund applies a similar QGLP framework as its midcap sibling but spans across large and mid-cap segments. This dual-cap approach allows participation in growth opportunities while cushioning against sharp corrections. Its portfolio typically comprises 30–40 stocks with a bias toward financials, manufacturing, and consumption. The fund's ability to identify scalable franchises early has played a key role in its recent performance. Investors looking for high returns without going fully into small or mid-caps will find this fund to be a strategic core holding.

4) ITI Small Cap Fund

With a 3-year CAGR of 32.36%, ITI Small Cap Fund has risen through the ranks with a distinct investment process. The fund uses its in-house 'SCDV' (Secular, Cyclical, Defensive, Value Trap) framework to classify businesses and pick stocks with consistent earnings growth and favorable valuations. It has invested heavily in industrial manufacturing, railways, and building materials, capitalizing on India's infra push. The fund’s relatively smaller AUM gives it agility to maneuver through emerging opportunities often missed by larger funds. It’s suitable for investors willing to accept short-term volatility for the potential of high long-term returns through disciplined SIPs.

5) HDFC Mid-Cap Opportunities Fund

HDFC Mid-Cap Opportunities Fund, a long-standing name in the Indian mutual fund space, has delivered an impressive 3-year CAGR of 32.15%. Known for its quality bias, the fund maintains a balanced portfolio of 50–60 fundamentally sound midcap companies with proven business models, conservative capital structures, and stable cash flows. It emphasizes bottom-up stock picking and sectoral diversification, reducing exposure to overvalued or speculative themes. Sectors such as engineering, healthcare, and IT have featured prominently in its portfolio. What distinguishes this fund is its disciplined approach, with low turnover and a focus on building wealth over multiple market cycles. The fund has weathered market volatility better than many of its peers, making it an appealing choice for investors seeking steady performance. Its manager avoids excessive sector concentration and frequently rebalances the portfolio based on valuation signals. With a large AUM, the fund prioritizes liquidity and typically avoids micro-cap names. Overall, it's best suited for investors seeking dependable mid-cap exposure with a moderate risk appetite and a long-term horizon.

6) Invesco India Midcap Fund

With a 3-year CAGR of 32.06%, Invesco India Midcap Fund stands out as a consistent performer in the midcap space. The fund is driven by a philosophy of investing in high-quality, scalable businesses with sustainable earnings visibility. It maintains a diversified portfolio of 45–55 stocks across sectors like specialty chemicals, capital goods, consumption, and BFSI. The fund’s performance is aided by its disciplined process of valuation-based stock selection and long holding periods. While it does not chase momentum, it has benefitted from identifying secular growth trends early, such as the rise of Indian chemical manufacturers and digitization-led plays in mid-tier IT. Its risk-adjusted performance has also remained strong due to careful sector allocation and bottom-up research. The fund has been less volatile compared to peers, making it attractive for conservative investors looking for midcap returns with a smoother ride. With moderate turnover and a preference for structural themes, it suits investors who want to complement their large-cap holdings with steady midcap alpha.

7) Motilal Oswal ELSS Tax Saver Fund

The Motilal Oswal ELSS Tax Saver Fund combines tax efficiency with high-growth potential, offering a CAGR of 31.62% over the past three years. Operating under the ELSS category with a 3-year lock-in, the fund invests with a focused approach using the AMC’s trademark QGLP investment philosophy. Typically holding 25–30 stocks, the fund leans toward high-conviction bets in emerging sectors like real estate ancillaries, auto components, and private sector banks. Despite being an ELSS, it does not dilute its investment thesis for diversification’s sake and maintains a relatively aggressive stance. The fund’s concentrated nature enhances return potential but also introduces short-term risk. Its strong track record over both bull and bear markets shows the merit of its long-term strategy. For investors looking to combine tax-saving with aggressive equity growth, and who can handle intermittent volatility, this fund represents a compelling choice. SIPs are particularly recommended for navigating market cycles smoothly.

8) Edelweiss Mid Cap Fund

Edelweiss Mid Cap Fund has surprised many by delivering a stellar 3-year CAGR of 31.44%. The fund employs a flexible, theme-based investment strategy, often allocating capital to both secular growth opportunities and short-term sectoral rotations. Its portfolio construction reflects a mix of cyclical recovery bets—such as infrastructure, capital goods, and defence—and core compounders from consumption and financial services. The fund’s dynamic approach allows it to adapt swiftly to changing macro and sectoral trends. While it maintains a moderate portfolio size of around 40–45 stocks, it actively manages sector exposures based on valuation comfort and earnings potential. What stands out is the fund's proactive participation in sunrise sectors like clean energy, logistics, and building materials. Despite its tactical strategy, the fund manager maintains strict risk controls, keeping beta within check. This balance of agility and prudence makes the fund suitable for investors who want alpha generation without excessive concentration risk. SIPs are ideal to manage volatility.

9) Invesco India Smallcap Fund

With a 3-year CAGR of 31.30%, Invesco India Smallcap Fund has gained popularity among investors seeking structured exposure to the high-growth small-cap space. The fund emphasizes bottom-up stock selection with a focus on scalable, capital-efficient businesses with strong management pedigree. It has typically steered clear of speculative and illiquid counters, instead opting for small-caps with strong fundamentals and earnings visibility. Sectors such as chemicals, auto ancillaries, and consumer durables have been key contributors to performance. Unlike some small-cap peers that pursue aggressive churn, this fund maintains a long-term orientation, minimizing portfolio turnover. The fund also balances risk through careful diversification—usually holding 60–70 stocks to mitigate single-stock volatility. For investors who want steady exposure to small-cap wealth creation without extreme risk-taking, this fund represents a good balance of growth and discipline.

10) Quant Small Cap Fund

Quant Small Cap Fund has delivered a remarkable 30.61% CAGR, benefiting from a unique investment style rooted in data analytics, macro modeling, and tactical allocation. Unlike most funds driven by bottom-up research, Quant AMC uses proprietary models to take swift and sometimes contrarian calls across sectors and market caps. This macro-tactical approach has allowed the fund to profit from government policy shifts and sectoral rotations, particularly in themes like PSU banks, defence, railways, and logistics. The fund is not afraid to take bold positions and has a relatively high churn rate to adapt to market momentum. While this strategy can lead to volatility, it has also helped the fund stay ahead in different market cycles. Its high-risk, high-return nature makes it more suitable for sophisticated investors who understand the fund’s dynamic style and are willing to tolerate short-term swings for long-term alpha.

11) Nippon India Growth Fund

With a legacy dating back over two decades, Nippon India Growth Fund remains one of the most consistent performers in the mid-cap space, delivering 30.50% CAGR over three years. The fund adopts a diversified, growth-oriented investment approach, balancing cyclical plays with secular growth stories. It has participated in key themes like construction, BFSI, capital goods, and chemicals. The portfolio generally consists of 50–60 stocks with active risk management and periodic rebalancing. One of its strengths lies in combining top-down sectoral views with bottom-up stock picking, allowing the fund to benefit from both macro and micro opportunities. Despite its large AUM, the fund has maintained agility and outperformed benchmarks across multiple cycles. Investors looking for a mid-cap fund with consistent returns, solid track record, and risk controls will find this a reliable long-term core holding.

12) Nippon India Multi Cap Fund

Nippon India Multi Cap Fund has delivered a strong 30.10% CAGR by leveraging the flexibility of the multi-cap mandate. It allocates capital across large, mid, and small-cap segments, which helps diversify risk while maximizing upside across market cycles. The fund has adopted a blend of bottom-up stock picking and top-down macro views to invest in sectors like defence, infrastructure, specialty chemicals, and consumer goods. What adds to its appeal is a balanced portfolio construction—typically holding around 60–70 stocks to spread risk. The fund also actively adjusts its cap-weight exposure based on valuation and earnings expectations. By not being overdependent on a single market segment, it has outperformed in various phases of the market. This makes it a versatile choice for investors seeking diversified equity exposure with growth potential.

13) JM Value Fund

JM Value Fund, with a 3-year CAGR of 30.08%, stands out for its contrarian approach. The fund focuses on undervalued stocks with strong fundamentals and turnaround potential. It has capitalized on the revival of public sector undertakings (PSUs), metals, and cyclical industrials, many of which were trading at deep discounts to their intrinsic value. Its strategy involves identifying underappreciated businesses undergoing structural or management change and investing in them well before consensus builds. This value-focused approach can take time to yield results but often delivers substantial upside when market sentiment shifts. The fund’s compact size gives it flexibility to invest in opportunities that are off the radar of larger peers. Suitable for patient investors who believe in the long-term value investing philosophy, this fund can complement more growth-oriented holdings in a diversified portfolio.

14) Nippon India Small Cap Fund

One of the largest and most widely held small-cap funds in India, Nippon India Small Cap Fund has managed to generate a 30.01% CAGR over the past three years, despite its massive AUM. The fund’s wide portfolio—often exceeding 150 stocks—spreads across emerging sectors, including railways, defence, chemicals, and manufacturing. Its research-led, bottom-up approach enables discovery of potential mid-cap leaders of tomorrow. What makes the fund remarkable is its ability to consistently identify scalable businesses at early stages and ride the growth curve. However, due to its large size, liquidity management is key, and the fund tends to avoid ultra-small or illiquid names. Volatility is inherent due to the nature of small-cap investing, but a disciplined SIP strategy and a long-term horizon can help investors benefit from compounding. It's best suited for high-risk investors with at least a 7–10 year outlook.

🔍 Comparative Outlook: Themes and Patterns

Upon examining the top-performing funds, a few dominant themes emerge. Mid and small-cap categories dominate the list, reflecting the sectoral and thematic outperformance in areas such as manufacturing, capital goods, defence, and chemicals. A significant number of funds (like Motilal Oswal Midcap and Bandhan Small Cap) have employed concentrated, high-conviction strategies, while others like Nippon India Small Cap and JM Value have preferred broader diversification.

Fund houses such as Motilal Oswal, Nippon India, and Invesco have multiple schemes in the list, showcasing the consistency of their investment philosophies across categories. It is also evident that thematic agility (as seen in Quant) and disciplined valuation awareness (as in HDFC Midcap Opportunities) both have their place in portfolio success.

Overall, while past returns are not guarantees for the future, fund selection guided by investment discipline, quality focus, and long-term orientation continues to yield outsized results.

🧭 Suggested Model Portfolios by Investor Profile

1. Conservative Long-Term Investor (7+ Years Horizon, Moderate Risk Tolerance)

• 60% in diversified mid-cap and large-mid cap funds: HDFC Midcap Opportunities, Invesco India Midcap, Motilal Oswal Large & Midcap

• 20% in ELSS for tax benefits and equity exposure: Motilal Oswal ELSS Tax Saver

• 20% in multi-cap or balanced high-quality small-cap exposure: Nippon India Multi Cap, Invesco India Smallcap

2. Aggressive Investor (10+ Years Horizon, High Risk Appetite)

• 40% in focused small-cap funds: Bandhan Small Cap, ITI Small Cap, Quant Small Cap

• 30% in core mid-cap holdings: Edelweiss Mid Cap, Nippon India Growth Fund

• 30% in high-conviction ELSS/value: Motilal Oswal ELSS, JM Value Fund

3. Goal-Based Investor (Saving for a child’s education or retirement in 10–15 years)

• 50% in quality mid-cap/large-midcap blend: HDFC Midcap Opportunities, Motilal Oswal Large & Midcap

• 30% in growth-focused small-cap exposure through SIP: Nippon India Small Cap, Invesco India Smallcap

• 20% in multi-cap fund for all-weather allocation: Nippon India Multi Cap

These model portfolios are only indicative. Allocation should always be tailored based on personal goals, return expectations, and risk tolerance in consultation with a qualified financial advisor.

📌 Final Word

While the 30%+ CAGR club is a rare achievement in the mutual fund industry, sustained performance comes from robust fund management practices and not short-term momentum. Investors should refrain from chasing past returns blindly and instead align fund selection with their financial goals, risk profiles, and investment timelines. The true power of mutual funds lies in compounding over time—something these 14 funds have showcased impressively in recent years.