Investors often look at past performance to identify winning mutual funds. While past returns do not guarantee future performance, analyzing 5-year CAGR helps in identifying funds that have performed well across market cycles. In this article, we will look at the top 10 mutual funds based on 5-year returns and evaluate whether they are worth considering in 2026.
How We Selected These Top 10 Mutual Funds
We have filtered mutual funds based on the following criteria:
- Highest 5-year CAGR returns
- Consistency across 3-year and 10-year periods
- Includes diversified, sectoral, thematic, and global funds
- Data compiled from reliable mutual fund databases
Top 10 Mutual Funds to Invest in 2026 (Based on 5-Year Returns)
| S No | Fund Name | 5-Year CAGR |
|---|---|---|
| 1 | SBI PSU Fund | 27.43% |
| 2 | Aditya Birla Sun Life PSU Equity Fund | 26.92% |
| 3 | ICICI Prudential BHARAT 22 FOF | 25.71% |
| 4 | Invesco India PSU Equity Fund | 25.68% |
| 5 | ICICI Prudential Infrastructure Fund | 25.03% |
| 6 | DSP World Gold Mining Overseas Equity FoF | 24.63% |
| 7 | DSP India T.I.G.E.R Fund | 24.26% |
| 8 | LIC MF Infrastructure Fund | 24.06% |
| 9 | Canara Robeco Infrastructure Fund | 24.03% |
| 10 | Quant Small Cap Fund | 24.02% |
1) SBI PSU Fund
- Category: Sectoral (PSU)
- 3-Year CAGR: 32.95%
- 5-Year CAGR: 27.43%
- 10-Year CAGR: 16.41%
- Why to Invest: Strong performance driven by PSU re-rating and government reforms
- Risk Factors: High concentration risk in PSU stocks
2) Aditya Birla Sun Life PSU Equity Fund
- Category: Sectoral (PSU)
- 3-Year CAGR: 29.82%
- 5-Year CAGR: 26.92%
- Why to Invest: Beneficiary of PSU turnaround story
- Risk Factors: Highly cyclical and dependent on policy changes
3) ICICI Prudential BHARAT 22 FOF
- Category: Thematic (ETF-based FOF)
- 3-Year CAGR: 25.40%
- 5-Year CAGR: 25.71%
- Why to Invest: Exposure to diversified PSU basket via ETF route
- Risk Factors: Limited flexibility due to ETF structure
4) Invesco India PSU Equity Fund
- Category: Sectoral (PSU)
- 3-Year CAGR: 30.56%
- 5-Year CAGR: 25.68%
- 10-Year CAGR: 19.25%
- Why to Invest: Consistent PSU exposure with strong long-term returns
- Risk Factors: Sector concentration risk
5) ICICI Prudential Infrastructure Fund
- Category: Sectoral (Infrastructure)
- 3-Year CAGR: 22.51%
- 5-Year CAGR: 25.03%
- 10-Year CAGR: 18.69%
- Why to Invest: Beneficiary of India’s infrastructure growth story
- Risk Factors: Sensitive to economic cycles
6) DSP World Gold Mining Overseas Equity FoF
- Category: Global/Thematic
- 3-Year CAGR: 45.45%
- 5-Year CAGR: 24.63%
- 10-Year CAGR: 16.83%
- Why to Invest: Diversification through global gold mining companies
- Risk Factors: Commodity price volatility and currency risk
7) DSP India T.I.G.E.R Fund
- Category: Thematic (Infrastructure & Growth)
- 3-Year CAGR: 25.67%
- 5-Year CAGR: 24.26%
- 10-Year CAGR: 18.29%
- Why to Invest: Focus on infrastructure-led growth opportunities
- Risk Factors: Sectoral concentration
8) LIC MF Infrastructure Fund
- Category: Sectoral (Infrastructure)
- 3-Year CAGR: 28.40%
- 5-Year CAGR: 24.06%
- 10-Year CAGR: 17.81%
- Why to Invest: Strong rebound in infrastructure sector
- Risk Factors: High volatility
9) Canara Robeco Infrastructure Fund
- Category: Sectoral (Infrastructure)
- 3-Year CAGR: 26.16%
- 5-Year CAGR: 24.03%
- 10-Year CAGR: 17.79%
- Why to Invest: Consistent infrastructure exposure
- Risk Factors: Economic sensitivity
10) Quant Small Cap Fund
- Category: Small Cap
- 3-Year CAGR: 19.82%
- 5-Year CAGR: 24.02%
- 10-Year CAGR: 18.57%
- Why to Invest: Strong alpha generation in small-cap segment
- Risk Factors: High volatility and drawdowns
Quick Comparison of Top 10 Funds
| Fund Name | 3Y CAGR | 5Y CAGR | 10Y CAGR |
|---|---|---|---|
| SBI PSU Fund | 32.95% | 27.43% | 16.41% |
| ABSL PSU Equity | 29.82% | 26.92% | — |
| ICICI Bharat 22 FOF | 25.40% | 25.71% | — |
| Invesco PSU Fund | 30.56% | 25.68% | 19.25% |
| ICICI Infra Fund | 22.51% | 25.03% | 18.69% |
| DSP Gold Mining FoF | 45.45% | 24.63% | 16.83% |
| DSP TIGER Fund | 25.67% | 24.26% | 18.29% |
| LIC Infra Fund | 28.40% | 24.06% | 17.81% |
| Canara Infra Fund | 26.16% | 24.03% | 17.79% |
| Quant Small Cap | 19.82% | 24.02% | 18.57% |
Key Insights from These Top Performing Funds
- Majority of top performers are sectoral funds (PSU and Infrastructure)
- PSU theme has delivered exceptional returns in last 5 years
- High returns are associated with higher risk and volatility
- Diversified funds are largely missing from the top performers list
Should You Invest Based Only on Past 5-Year Returns?
Investing purely based on past performance can be risky. Market cycles change and sectoral themes may not continue to perform in the future. Investors should also consider:
- Risk appetite
- Investment horizon
- Diversification across categories
Who Should Invest in These Mutual Funds?
- Investors with high-risk appetite
- Long-term investors (5+ years horizon)
- Those looking to take tactical exposure to sectors like PSU or infrastructure
Risks You Should Consider Before Investing
- Sector concentration risk
- Market volatility
- Policy and economic risks
- Global risks (for international funds)
Conclusion – Are These the Best Mutual Funds for 2026?
While these mutual funds have delivered strong 5-year returns, most of them are sectoral or thematic in nature. Investors should avoid putting all money into such funds and instead build a diversified portfolio. Use these funds selectively to enhance returns, but not as core portfolio holdings.
FAQs
1) Which mutual fund gave highest returns in last 5 years?
SBI PSU Fund has delivered one of the highest returns among equity mutual funds in the last 5 years.
2) Is it safe to invest based on past returns?
No, past performance does not guarantee future returns.
3) Which category is best for 2026?
Diversified equity funds like flexi-cap and large & mid-cap funds are generally safer compared to sectoral funds.
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