Markets have witnessed strong momentum over the last six months, especially in select sectors such as defence, healthcare, power and small caps. While many equity mutual funds delivered healthy gains, only a handful managed to generate 20% to 25% returns during this period.
A closer look at these funds shows that most belong to sectoral/thematic or small-cap categories, which generally outperform during favourable market phases but can also witness sharp corrections when market sentiment changes.
In this article, let’s look at the top 10 equity mutual funds that delivered 20% to 25% returns in the last six months, understand what these funds invest in, their longer-term performance and the risks investors should be aware of before considering them.
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10 Mutual Funds That Gave 20% to 25% Returns in Last 6 Months (July 2026)
| S.No | Mutual Fund | 6 Month Return (%) |
|---|---|---|
| 1 | Bank of India Small Cap Fund | 25.2 |
| 2 | TRUSTMF Small Cap Fund | 25.1 |
| 3 | HDFC Defence Fund | 22.9 |
| 4 | Kotak Healthcare Fund | 22.7 |
| 5 | Groww BSE Power ETF FOF | 22.3 |
| 6 | JM Small Cap Fund | 21.9 |
| 7 | Motilal Oswal Small Cap Fund | 20.9 |
| 8 | Edelweiss Recently Listed IPO Fund | 20.5 |
| 9 | Union Small Cap Fund | 20.3 |
| 10 | HDFC Pharma and Healthcare Fund | 19.8 |
Data as of 9 July 2026.
How We Filtered These Funds
For this analysis, we considered all domestic equity mutual funds, including diversified, sectoral, thematic, small cap, mid cap and other equity-oriented schemes.
We have excluded international/global mutual funds as overseas investment limits imposed on Indian mutual funds can temporarily impact fresh investments and make comparisons less meaningful.
The ranking is purely based on point-to-point returns generated during the last six months.
Check our analysis – 16 Mutual Funds with Positive Returns Every Calendar Year in last 10 years.
Key Observations
A few interesting trends emerge from this list.
- Small Cap Funds dominate, with four schemes making it to the top 10. This indicates that the small-cap segment participated strongly in the recent market rally.
- Sectoral funds continue to outperform. Defence, healthcare and power themes have generated impressive returns over the last six months.
- Investors should also note that seven of these funds either have a limited long-term track record or belong to concentrated sectors, making them relatively riskier than diversified equity funds.
- High short-term returns don’t necessarily translate into sustained long-term performance. Evaluating consistency across multiple market cycles remains important.
Fund Wise Snapshot
1) Bank of India Small Cap Fund
Investment Objective
The fund primarily invests in small-cap companies that have the potential to deliver long-term capital appreciation.
CAGR Returns
| Period | Return |
|---|---|
| 6 Months | 25.2% |
| 1 Year | 16.3% |
| 3 Years | 23.0% |
| 5 Years | 20.5% |
| 10 Years | — |
Highlights
- Highest six-month return in this list.
- Strong 3-year and 5-year performance.
- Suitable for investors with higher risk appetite.
Risk Factors
Small-cap funds can experience sharp volatility during market corrections.
2) TRUSTMF Small Cap Fund
Investment Objective
Invests predominantly in high-growth small-cap companies across sectors.
CAGR Returns
| Period | Return |
|---|---|
| 6 Months | 25.1% |
| 1 Year | 24.7% |
| 3 Years | — |
| 5 Years | — |
| 10 Years | — |
Highlights
- Excellent short-term performance.
- Among the best-performing small-cap funds in the recent rally.
Risk Factors
Limited track record makes it difficult to assess performance across market cycles.
3) HDFC Defence Fund
Investment Objective
Seeks long-term capital appreciation by investing primarily in defence and allied sectors.
CAGR Returns
| Period | Return |
|---|---|
| 6 Months | 22.9% |
| 1 Year | 14.7% |
| 3 Years | 42.9% |
| 5 Years | — |
| 10 Years | — |
Highlights
- One of the best-performing defence sector funds.
- Outstanding 3-year returns reflect the sector’s strong growth.
Risk Factors
Sector concentration can lead to significant volatility if defence stocks underperform.
4) Kotak Healthcare Fund
Investment Objective
Invests in pharmaceutical, healthcare, biotechnology and related businesses.
CAGR Returns
| Period | Return |
|---|---|
| 6 Months | 22.7% |
| 1 Year | 21.3% |
| 3 Years | — |
| 5 Years | — |
| 10 Years | — |
Highlights
- Benefited from renewed interest in healthcare stocks.
- Strong short-term performance.
Risk Factors
Returns depend heavily on the healthcare sector’s performance.
5) Groww BSE Power ETF Fund of Fund
Investment Objective
Invests in units of an ETF tracking companies from the power sector.
CAGR Returns
| Period | Return |
|---|---|
| 6 Months | 22.3% |
| 1 Year | — |
| 3 Years | — |
| 5 Years | — |
| 10 Years | — |
Highlights
- Captures the recent rally in power and utility stocks.
- Offers exposure through an ETF structure.
Risk Factors
Highly concentrated exposure to a single sector.
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6) JM Small Cap Fund
Investment Objective
Invests primarily in small-cap companies with long-term growth potential.
CAGR Returns
| Period | Return |
|---|---|
| 6 Months | 21.9% |
| 1 Year | 12.2% |
| 3 Years | — |
| 5 Years | — |
| 10 Years | — |
Highlights
- Strong recovery during the last six months.
- Diversified portfolio within the small-cap universe.
Risk Factors
Small-cap investing carries relatively higher downside risk during market declines.
7) Motilal Oswal Small Cap Fund
Investment Objective
Focuses on fundamentally strong small-cap companies with scalable business models.
CAGR Returns
| Period | Return |
|---|---|
| 6 Months | 20.9% |
| 1 Year | 15.8% |
| 3 Years | — |
| 5 Years | — |
| 10 Years | — |
Highlights
- Benefited from broad-based participation in small-cap stocks.
- Focus on quality businesses.
Risk Factors
Small-cap valuations may fluctuate significantly during volatile markets.
8) Edelweiss Recently Listed IPO Fund
Investment Objective
Invests predominantly in recently listed companies and upcoming IPO opportunities.
CAGR Returns
| Period | Return |
|---|---|
| 6 Months | 20.5% |
| 1 Year | 19.8% |
| 3 Years | 19.7% |
| 5 Years | 13.7% |
| 10 Years | — |
Highlights
- Provides unique exposure to newly listed companies.
- Has delivered healthy returns across multiple time periods.
Risk Factors
IPO performance depends on market sentiment and can be highly volatile.
Also check – 11 High Return Mutual Funds with Over 20% CAGR in the Last 10 Years
9) Union Small Cap Fund
Investment Objective
Invests across diversified small-cap companies aiming for long-term capital appreciation.
CAGR Returns
| Period | Return |
|---|---|
| 6 Months | 20.3% |
| 1 Year | 16.4% |
| 3 Years | 20.4% |
| 5 Years | 17.9% |
| 10 Years | 17.4% |
Highlights
- Consistent long-term performance.
- One of the few funds in this list with a 10-year track record.
Risk Factors
Like all small-cap funds, investors should expect higher volatility.
10) HDFC Pharma and Healthcare Fund
Investment Objective
Invests in pharmaceutical, hospitals, diagnostics and healthcare-related companies.
CAGR Returns
| Period | Return |
|---|---|
| 6 Months | 19.8% |
| 1 Year | 21.9% |
| 3 Years | — |
| 5 Years | — |
| 10 Years | — |
Highlights
- Benefited from improving outlook for healthcare companies.
- One of the better-performing healthcare sector funds.
Risk Factors
Performance largely depends on the pharma and healthcare sector.
What Investors Should Learn from This List
While these funds have generated impressive returns over the last six months, investors should avoid selecting mutual funds solely based on recent performance.
Several funds in this list belong to small-cap or sectoral categories, which generally carry higher volatility than diversified equity funds. Their performance can vary significantly depending on market cycles and sector trends.
Instead of chasing recent winners, investors should evaluate:
- Their financial goals
- Investment horizon
- Risk appetite
- Asset allocation
- Long-term consistency of the fund
- Portfolio diversification
A fund that delivered 22% in the last six months may not necessarily remain the best performer over the next three to five years.
Frequently Asked Questions (FAQs)
1) Should I invest in a mutual fund just because it delivered over 20% returns in the last six months?
No. Short-term returns reflect recent market conditions. Always consider long-term performance, your financial goals and risk tolerance before investing.
2) Why are most funds in this list sectoral or small-cap funds?
Sectoral and small-cap funds tend to outperform during favourable market phases due to their concentrated portfolios. However, they can also witness steeper declines during market corrections.
3) Are sectoral mutual funds suitable for all investors?
No. Sectoral funds are generally better suited for experienced investors who understand the risks associated with concentrated investments.
4) Why are some funds missing 3-year, 5-year or 10-year returns?
These schemes are relatively new and have not completed the required investment period to report returns for those timeframes.
5) How should investors use this list?
Treat this as a performance snapshot rather than a recommendation. Use it to identify outperforming funds, but make investment decisions based on your financial goals, investment horizon and overall portfolio allocation.
Conclusion
The last six months have been rewarding for several equity mutual funds, particularly those focused on small caps, defence, healthcare and power sectors. While the returns are impressive, investors should remember that short-term performance alone should never drive investment decisions.
Before investing, evaluate whether a fund aligns with your financial goals, risk profile and investment tenure. A well-diversified portfolio built around your long-term objectives is far more important than chasing the latest top-performing fund.
Disclaimer: This article is meant purely for educational and informational purposes and should not be construed as investment advice or a recommendation to buy or sell any mutual fund scheme. Past performance is not an indicator of future returns.
