May 2026 has turned out to be rewarding for several mutual fund investors, especially those invested in small cap and midcap mutual funds. Despite market volatility in the last few months, a few equity mutual funds managed to deliver impressive one-year returns ranging between 23% and 34%.
Interestingly, small cap funds, midcap funds, and focused funds dominated the chart this time. However, investors should remember that high returns often come with higher volatility and risk.
In this article, we will review 10 mutual funds that generated 23% to 34% returns in the last one year (as of May-2026), along with their risk factors, suitability, and our view on each fund.
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How we filtered these mutual funds?
- We considered only equity mutual funds
- Included categories such as large cap, midcap, small cap, flexicap, multicap, focused, and ELSS funds
- Excluded sectoral, thematic, and international/global mutual funds
- Selected funds with highest 1-year returns
- Included Direct Plans for consistency
- Data considered as of May-2026
10 Mutual Funds That Gave 23% to 34% Returns in Last 1 Year
Here is the list of Top Performing Mutual Funds in the Last 1 Year.
1) TRUSTMF Small Cap Fund
Fund Objective:
This fund invests predominantly in small cap companies that have high growth potential and emerging business opportunities.
Annualised Returns:
- 1 Week: 4.7%
- 1 Month: 16.0%
- 3 Months: 15.2%
- 6 Months: 9.8%
- 1 Year: 33.6%
Who can invest?
- Aggressive investors
- Investors with long-term horizon of 5+ years
- Those looking for high-growth opportunities
Risk Factors:
- Very high volatility due to small cap exposure
- Liquidity risks during market corrections
- Sharp drawdowns possible during bearish phases
My View:
The fund has generated exceptional one-year returns. However, investors should avoid chasing performance blindly as small cap funds can be extremely volatile.
2) Union Small Cap Fund
Fund Objective:
This scheme invests in small cap companies across sectors aiming for long-term capital appreciation.
Annualised Returns:
- 1 Week: 4.6%
- 1 Month: 14.1%
- 3 Months: 14.4%
- 6 Months: 11.4%
- 1 Year: 30.0%
- 3 Years: 23.8%
- 5 Years: 20.7%
- 10 Years: 17.9%
Who can invest?
- High risk investors
- Investors seeking long-term wealth creation
Risk Factors:
- Small caps can witness prolonged underperformance
- Market sentiment impacts returns significantly
- High volatility compared to large cap funds
My View:
Consistent long-term performance makes this fund attractive. SIP investment approach can help reduce volatility risk.
3) ICICI Prudential Midcap Fund
Fund Objective:
The fund primarily invests in mid-sized companies with scalable business models and growth opportunities.
Annualised Returns:
- 1 Week: 2.9%
- 1 Month: 9.5%
- 3 Months: 7.1%
- 6 Months: 10.8%
- 1 Year: 29.3%
- 3 Years: 27.8%
- 5 Years: 22.0%
- 10 Years: 18.8%
Who can invest?
- Moderate to high risk investors
- Investors seeking balanced growth and stability
Risk Factors:
- Midcaps can correct sharply during market downturns
- Valuation risks during bull runs
- Sector concentration risks
My View:
This fund has shown strong consistency across multiple time frames. Suitable for investors seeking quality midcap exposure.
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4) HSBC Midcap Fund
Fund Objective:
Invests in midcap companies across sectors with focus on growth-oriented businesses.
Annualised Returns:
- 1 Week: 3.4%
- 1 Month: 13.0%
- 3 Months: 9.8%
- 6 Months: 11.0%
- 1 Year: 27.8%
- 3 Years: 29.1%
- 5 Years: 21.1%
- 10 Years: 19.1%
Who can invest?
- Investors with moderate to high risk appetite
- Long-term investors
Risk Factors:
- Midcap valuation risks
- Higher volatility than large cap funds
- Economic slowdown can impact earnings growth
My View:
The fund has delivered strong long-term returns and appears relatively consistent among midcap peers.
5) Groww Multicap Fund
Fund Objective:
This multicap fund invests across large cap, midcap, and small cap stocks.
Annualised Returns:
- 1 Week: 3.8%
- 1 Month: 10.3%
- 3 Months: 8.7%
- 6 Months: 7.0%
- 1 Year: 25.1%
Who can invest?
- Moderate risk investors
- Investors looking for diversified market-cap exposure
Risk Factors:
- Portfolio allocation changes can impact returns
- Market-wide corrections affect all categories
My View:
Multicap funds offer better diversification compared to pure small cap or midcap funds. Suitable for investors wanting balanced exposure.
6) Helios Mid Cap Fund
Fund Objective:
Focuses on mid-sized businesses with long-term growth opportunities.
Annualised Returns:
- 1 Week: 4.8%
- 1 Month: 11.6%
- 3 Months: 7.0%
- 6 Months: 2.2%
- 1 Year: 24.6%
Who can invest?
- Moderate to aggressive investors
- Investors seeking midcap growth opportunities
Risk Factors:
- Midcap market volatility
- Short performance history
- Economic cycles can affect returns
My View:
While recent returns look attractive, investors should evaluate consistency over longer periods before investing heavily.
Investors should note that none of the above midcap mutual funds discussed are part of Top 5 Mid Cap Mutual Funds that generated highest 3 & 5 Year Rolling Returns.
7) DSP Small Cap Fund
Fund Objective:
Invests in emerging small cap companies with high growth potential.
Annualised Returns:
- 1 Week: 3.2%
- 1 Month: 9.8%
- 3 Months: 9.4%
- 6 Months: 7.5%
- 1 Year: 23.6%
- 3 Years: 22.7%
- 5 Years: 21.1%
- 10 Years: 17.9%
Who can invest?
- High risk investors
- Long-term SIP investors
Risk Factors:
- Sharp corrections during market downturns
- Liquidity concerns in small cap segment
- Valuation risks
My View:
DSP Small Cap Fund has maintained reasonable long-term consistency. SIP route is preferable for such volatile categories.
Explore – Best SIP Mutual Funds for 2026
8) Motilal Oswal Focused Fund
Fund Objective:
This focused fund invests in a concentrated portfolio of high-conviction stocks.
Annualised Returns:
- 1 Week: 4.0%
- 1 Month: 10.1%
- 3 Months: 9.6%
- 6 Months: 6.6%
- 1 Year: 23.6%
- 3 Years: 12.9%
- 5 Years: 10.8%
- 10 Years: 13.3%
Who can invest?
- Investors comfortable with concentrated portfolios
- Moderate to high risk investors
Risk Factors:
- Concentration risk
- Fund manager strategy risk
- Higher impact from individual stock movements
My View:
Focused funds can outperform during favorable market cycles, but they also carry higher stock-specific risks.
9) Bank of India Small Cap Fund
Fund Objective:
The scheme invests in small cap companies with strong growth potential.
Annualised Returns:
- 1 Week: 4.4%
- 1 Month: 15.2%
- 3 Months: 16.2%
- 6 Months: 9.3%
- 1 Year: 23.3%
- 3 Years: 24.7%
- 5 Years: 22.3%
Who can invest?
- Aggressive investors
- Investors with long-term horizon
Risk Factors:
- High volatility
- Liquidity risk in small caps
- Market correction risks
My View:
The fund has shown strong momentum in recent months. Investors should stagger investments instead of lump sum investing.
None of the above smallcap mutual funds are forming part of Top 5 Smallcap Mutual Funds that generated highest rolling returns in lsat 3 to 5 years.
10) Motilal Oswal Large and Midcap Fund
Fund Objective:
Invests across large cap and midcap stocks aiming for growth with some stability.
Annualised Returns:
- 1 Week: 3.9%
- 1 Month: 11.1%
- 3 Months: 10.6%
- 6 Months: 4.5%
- 1 Year: 23.0%
- 3 Years: 28.0%
- 5 Years: 23.4%
Who can invest?
- Moderate risk investors
- Investors seeking blend of stability and growth
Risk Factors:
- Midcap volatility
- Allocation strategy risks
- Market-wide corrections
My View:
Large & midcap category offers a relatively balanced investment approach compared to pure small cap funds.
Explore 10 Mutual Funds That Gave 14% to 67% Returns in 3 Months (May-26 Update).
Quick Comparison Table (Top Performers)
| Fund Name | 1 Year Return | 3 Year Return | 5 Year Return | Category |
|---|---|---|---|---|
| TRUSTMF Small Cap Fund | 33.6% | NA | NA | Small Cap |
| Union Small Cap Fund | 30.0% | 23.8% | 20.7% | Small Cap |
| ICICI Prudential Midcap Fund | 29.3% | 27.8% | 22.0% | Midcap |
| HSBC Midcap Fund | 27.8% | 29.1% | 21.1% | Midcap |
| Groww Multicap Fund | 25.1% | NA | NA | Multicap |
| Helios Mid Cap Fund | 24.6% | NA | NA | Midcap |
| DSP Small Cap Fund | 23.6% | 22.7% | 21.1% | Small Cap |
| Motilal Oswal Focused Fund | 23.6% | 12.9% | 10.8% | Focused |
| Bank of India Small Cap Fund | 23.3% | 24.7% | 22.3% | Small Cap |
| Motilal Oswal Large and Midcap Fund | 23.0% | 28.0% | 23.4% | Large & Midcap |
Summary of Mutual Fund Performance
- Small cap and midcap funds dominated the performance chart
- Top performer generated 33.6% returns in one year
- Several funds showed strong consistency across 3-year and 5-year periods
- High-return funds also carry high volatility risks
- SIP investing remains a better strategy for such categories
Conclusion
While these mutual funds have delivered impressive one-year returns, investors should avoid investing purely based on recent performance. Small cap and midcap funds can generate superior returns during bull markets, but they can also witness sharp corrections.
Investors should align mutual fund investments with their financial goals, risk appetite, and investment horizon. Diversification across categories and disciplined SIP investing can help manage market volatility better.
Disclaimer: Mutual fund investments are subject to market risks. Please read all scheme-related documents carefully before investing.
