Index mutual funds are often known for stability and low cost, but recent data shows that some of them have turned into stellar wealth creators. A few index funds have outperformed expectations, delivering over 20% CAGR in the last 5 years, proving that passive investing can also generate exceptional returns. In this article, we highlight the Top 5 Index Mutual Funds with 20%+ CAGR in last 5 years with strong long-term performance. If you own any of these, your portfolio might already be benefiting from India’s robust market growth.
Earlier we reviewed 5 Index Mutual Funds with Over 30% CAGR in the Last 3 Years.
What Are Index Mutual Funds?
Index mutual funds are passively managed funds that replicate the performance of a stock market index such as the Nifty 50, Nifty Midcap 150, or Nifty Smallcap 250. They don’t aim to beat the index but instead match its performance by holding the same stocks in the same proportion.
Key Benefits:
- Lower expense ratios compared to actively managed funds
- Simple and transparent investment strategy
- Ideal for long-term wealth creation
- Free from fund manager bias
As SEBI and market trends increasingly favor passive investing, index mutual funds have become one of the fastest-growing investment categories in India.
How Did We Shortlist These Funds?
Here’s how we identified the best-performing index mutual funds:
- Considered only index-based mutual funds across largecap, midcap, and smallcap indices.
- Reviewed the 5-year CAGR performance as of 13-Oct-2025.
- Selected funds that delivered over 20% CAGR in the last 5 years.
Top 5 Index Mutual Funds with 20%+ CAGR in 5 Years
Below are the top 5 index mutual funds that have outperformed consistently over the past 5 years.
| Scheme Name | AuM (Cr) | 1Y | 3Y | 5Y |
|---|---|---|---|---|
| Motilal Oswal Nifty Smallcap 250 Index Fund | 996.92 | -5.2% | 22.5% | 27.7% |
| Motilal Oswal Nifty Midcap 150 Index Fund | 2,630.75 | -0.3% | 23.1% | 27.7% |
| DSP Nifty 50 Equal Weight Index Fund | 2,284.93 | 1.0% | 18.3% | 23.0% |
| Motilal Oswal Nifty Next 50 Index Fund | 356.36 | -8.1% | 18.0% | 20.6% |
| HSBC Nifty Next 50 Index Fund | 138.69 | -8.5% | 17.7% | 20.4% |
Deep Dive into the Top 5 Index Mutual Funds
#1 – Motilal Oswal Nifty Smallcap 250 Index Fund
Category: Index – Smallcap
AuM: ₹996.92 Cr
Investment Objective: To replicate the performance of the Nifty Smallcap 250 Index, providing investors exposure to smallcap companies with high growth potential.
Performance Highlights:
- 1 Year: -5.2%
- 3 Years: 22.5% CAGR
- 5 Years: 27.7% CAGR
Why to Consider:
- Diversified exposure to 250 fast-growing smallcap companies
- Low-cost entry into India’s smallcap growth theme
- Ideal for long-term investors with a high-risk appetite
Risks:
- High volatility
- Vulnerability during market corrections
If you are looking for active funds in this category, then you should explore 5 Best Smallcap Mutual Funds to Invest in 2025 (Based on Rolling Returns).
#2 – Motilal Oswal Nifty Midcap 150 Index Fund
Category: Index – Midcap
AuM: ₹2,630.75 Cr
Investment Objective: To generate returns that mirror the performance of the Nifty Midcap 150 Index.
Performance Highlights:
- 1 Year: -0.3%
- 3 Years: 23.1% CAGR
- 5 Years: 27.7% CAGR
Why to Consider:
- Provides exposure to midcap companies with strong growth potential
- Balanced performance between smallcap aggression and largecap stability
- Excellent option for medium to long-term investors
Risks:
- Midcap volatility and cyclical market risks
Again if you like to explore active funds in midcap category, check 5 Best Midcap Mutual Funds to Invest in 2025 (Based on Rolling Returns).
#3 – DSP Nifty 50 Equal Weight Index Fund
Category: Index – Largecap (Equal Weight)
AuM: ₹2,284.93 Cr
Investment Objective: To mirror the performance of the Nifty 50 Equal Weight Index, where each stock in the Nifty 50 has equal importance.
Performance Highlights:
- 1 Year: 1.0%
- 3 Years: 18.3% CAGR
- 5 Years: 23.0% CAGR
Why to Consider:
- Equal weight structure reduces concentration risk
- Ensures balanced exposure across all Nifty 50 companies
- Ideal for investors seeking diversified largecap exposure
Risks:
- May underperform during periods dominated by a few large heavyweights
#4 – Motilal Oswal Nifty Next 50 Index Fund
Category: Index – Largecap (Next 50)
AuM: ₹356.36 Cr
Investment Objective: To replicate the Nifty Next 50 Index, consisting of companies ranked 51 to 100 on NSE by market capitalization.
Performance Highlights:
- 1 Year: -8.1%
- 3 Years: 18.0% CAGR
- 5 Years: 20.6% CAGR
Why to Consider:
- Provides exposure to potential future Nifty 50 entrants
- Balances growth and stability in the largecap segment
- Suitable for long-term investors seeking steady compounding
Risks:
- High sensitivity to market fluctuations
Investors can also check active funds from largecap category at 9 Large Cap Mutual Funds that Outperformed Their Benchmarks Over 3, 5, and 10 Years to Invest in 2025.
#5 – HSBC Nifty Next 50 Index Fund
Category: Index – Largecap (Next 50)
AuM: ₹138.69 Cr
Investment Objective: To deliver returns corresponding to the Nifty Next 50 Index performance.
Performance Highlights:
- 1 Year: -8.5%
- 3 Years: 17.7% CAGR
- 5 Years: 20.4% CAGR
Why to Consider:
- Consistent 5-year returns with moderate risk exposure
- Diversified largecap portfolio
- Good fit for investors preferring passive, low-cost investing
Risks:
- Moderate volatility and potential tracking error
Key Takeaways
- Motilal Oswal AMC dominates the list with 3 high-performing index funds.
- Smallcap and Midcap index funds have shown exceptional wealth creation over 5 years.
- Long-term investors benefited from staying invested through market cycles. We recommended earlier a Few Mutual Funds to invest for lumpsum in 2025.
- Index funds remain a low-cost, transparent, and efficient way to build wealth.
Conclusion
These Top 5 Index Mutual Funds with 20%+ CAGR in 5 Years highlight how passive investing can lead to outstanding results. Despite market fluctuations, disciplined long-term investors have enjoyed impressive wealth growth through these funds.
If you are yet to include index funds in your portfolio, consider adding one or two of these performers based on your risk tolerance and investment goals.
Disclaimer: Mutual fund investments are subject to market risks. Past performance may not be sustained in the future. Please consult a financial advisor before making investment decisions.
