Investors often perceive index funds as stable and conservative choices for long-term wealth creation. However, recent data proves that some index mutual funds are not just about passive investing — they have delivered exceptional returns, beating even many actively managed funds. In this article, we will explore into the Top 5 Index Mutual Funds that have generated over 30% CAGR in the last 3 years.
Do you know that there are 7 mutual funds that turned ₹ 1 Lakh to ₹ 5 Lakhs in 5 years ?
What Are Index Mutual Funds?
Index mutual funds are passively managed funds that aim to replicate the performance of a specific stock market index like the Nifty 50, Nifty Midcap 150, or Nifty Smallcap 50. They do not attempt to outperform the index but mirror its movement by investing in the same stocks in the same proportion.
These funds come with low expense ratios, are ideal for long-term investors, and offer returns aligned with market performance. With SEBI encouraging passive investing, the popularity of index funds has been on the rise.
How Did We Shortlist These Funds?
Here’s the simple approach we followed to shortlist these high-performing index mutual funds:
- Considered only index mutual funds across smallcap and midcap categories.
- Filtered based on 3-year CAGR performance.
- Selected schemes with over 30% annualised returns in the last 3 years.
Earlier we analysed 10 CRISIL 5-Star Rated Mutual Funds to invest in 2025.
List of Top 5 Index Mutual Funds with Over 30% CAGR in 3 Years
Let’s take a closer look at the 5 index mutual funds that have consistently delivered over 30% CAGR returns in the last 3 years.
| Scheme Name | 3Y CAGR | 3Y Absolute Return | 1 Lakh Turned to ₹ |
|---|---|---|---|
| Aditya Birla Sun Life Nifty Smallcap 50 Index Fund | 32% | 126% | ~2.26 Lakhs |
| Axis Nifty Smallcap 50 Index Fund | 32% | 126% | ~2.26 Lakhs |
| Axis Nifty Midcap 50 Index Fund | 31% | 120% | ~2.20 Lakhs |
| Motilal Oswal Nifty Midcap 150 Index Fund | 30% | 117% | ~2.17 Lakhs |
| Aditya Birla Sun Life Nifty Midcap 150 Index Fund | 30% | 117% | ~2.17 Lakhs |
*Returns are rounded off
Deep Drive into Top 5 Index Mutual Funds with Over 30% CAGR in 3 Years
Now let’s do a deep dive into each of these top-performing index funds.
#1 – Aditya Birla Sun Life Nifty Smallcap 50 Index Fund
Category: Index – Smallcap
Investment Objective: The scheme aims to provide returns that closely correspond to the performance of the Nifty Smallcap 50 Index, subject to tracking errors.
Annualised Returns:
- 1 Year: 7%
- 2 Year: 37%
- 3 Years: 32% ₹1 Lakh Turned to: ~₹2.26 Lakhs
- 5 Years: Not Applicable
Why to Consider: This fund offers exposure to high-growth potential smallcap companies with minimal expense ratio and strict index-based selection. It’s ideal for aggressive investors looking to tap into the smallcap rally.
Risks: High volatility, cyclical nature of smallcap stocks, and tracking error.
#2 – Axis Nifty Smallcap 50 Index Fund
Category: Index – Smallcap
Investment Objective: The fund aims to replicate the Nifty Smallcap 50 Index by investing in the same proportion and stocks.
Annualised Returns:
- 1 Year: 7%
- 2 Year: 37%
- 3 Years: 32% ₹1 Lakh Turned to: ~₹2.26 Lakhs
5 Years: Not Applicable Why to Consider: Similar to the Aditya Birla fund, this scheme gives diversified exposure to 50 smallcap companies. The fund has gained traction due to India’s economic revival and investor optimism in smallcap space.
Risks: Higher risk due to smaller company stocks; market downturns can impact returns sharply.
There are 13 Mutual Funds with 5 Star Rating from Value Research with over 30% CAGR in the last 5 years.
#3 – Axis Nifty Midcap 50 Index Fund
Category: Index – Midcap
Investment Objective: Aims to generate returns by investing in companies that form part of the Nifty Midcap 50 Index.
Annualised Returns:
- 1 Year: 7%
- 2 Year: 30%
- 3 Years: 31% ₹1 Lakh Turned to: ~₹2.2 Lakhs
Why to Consider: Midcap companies offer a balance between stability and growth. This fund benefits from a rising midcap segment with relatively lower volatility than smallcaps.
Risks: Still moderately volatile and subject to market and sector risks.
#4 – Motilal Oswal Nifty Midcap 150 Index Fund
Category: Index – Midcap
Investment Objective: The scheme seeks investment return that corresponds to the Nifty Midcap 150 Index.
Annualised Returns:
- 1 Year: 6%
- 2 Year: 29%
- 3 Years: 30% ₹1 Lakh Turned to: ~₹2.17 Lakhs
- 5 Years: 31%
Why to Consider: With broader exposure to 150 midcap stocks, this fund provides diversification within the midcap space and has delivered strong consistent returns in recent years.
Risks: Exposure to large number of midcap stocks can lead to increased tracking error.
#5 – Aditya Birla Sun Life Nifty Midcap 150 Index Fund
Category: Index – Midcap
Investment Objective: To generate returns that closely correspond to the performance of the Nifty Midcap 150 Index.
Annualised Returns:
- 1 Year: 5%
- 2 Year: 29%
- 3 Years: 30% ₹1 Lakh Turned to: ~₹2.17 Lakhs
- 5 Years: Not Applicable
Why to Consider: A solid performer with broad-based midcap exposure. Lower expense ratio and passive strategy make it an attractive option for long-term investors.
Risks: Midcap risk and potential underperformance during market corrections.
Check out our article on Top 5 Mutual Funds that turned ₹ 1 Lakh to ₹ 2 Lakhs in 2 years.
Conclusion: While index funds are often recommended for conservative and long-term investors, the above schemes have proven that even passive investing can deliver aggressive growth — provided you choose the right segment.
These 5 index mutual funds with over 30% CAGR in 3 years show how smallcap and midcap index funds are thriving in India’s current economic environment. Investors looking for simple, low-cost, and high-performing investments can consider these funds based on their risk profile.
One important thing to note — 3 of the 5 funds come from just two AMCs: Axis and Aditya Birla Sun Life, indicating AMC concentration. Additionally, these are focused on midcap and smallcap indices, which implies sector/index concentration. Investors may want to diversify beyond these to avoid concentration risk.
Remember, past performance is not a guarantee of future results. Always align investments with your financial goals and risk tolerance.
Note: Axis Mutual Fund was previously involved in a front-running case in 2022, where certain fund managers were alleged to have acted on insider information. The AMC has taken corrective actions since, including staff changes and internal process improvements. Investors should still stay informed about AMC-level governance as part of their due diligence.
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