Which Indian Mutual Fund Has Given the Highest Return?

When you ask which Indian mutual fund has given the highest return, you're not just looking for a name-you want to know where your money could have grown the most. But here’s the truth: the fund with the highest return last year might be the worst one next year. Returns don’t stay high forever. What matters is consistency, risk, and whether the fund fits your goals.

What Does "Highest Return" Even Mean?

People often look at 1-year returns and pick the fund that jumped the most. But that’s like choosing a car because it accelerated fastest off the line-not because it’s reliable on long drives. In mutual funds, returns are measured over time: 1 year, 3 years, 5 years, 10 years. The most reliable winners aren’t the ones that shot up suddenly. They’re the ones that kept climbing steadily.

For example, in the last 10 years, some equity mutual funds delivered over 20% annualized returns. That means if you’d invested ₹1 lakh in 2016, it would’ve grown to over ₹6.2 lakhs by 2026. That’s not luck. That’s smart asset allocation, strong portfolio management, and riding India’s economic growth.

The Top Contenders Over the Last 5-10 Years

Based on data from AMC reports, CRISIL, and Value Research up to December 2025, here are the funds that consistently ranked among the highest performers:

• Nippon India Growth Fund - Delivered 19.8% CAGR over 10 years. Focused on mid- and small-cap stocks with strong fundamentals. Held positions in companies like Polycab, UPL, and Adani Enterprises during their growth phases.
• Parag Parikh Flexi Cap Fund - 18.5% CAGR over 10 years. Known for value investing, low turnover, and avoiding overvalued stocks. It survived the 2022 tech crash better than most because it didn’t chase hype.
• Kotak Emerging Equity Fund - 18.2% CAGR over 10 years. Heavy exposure to manufacturing and export-oriented companies. Benefited from India’s supply chain shift post-pandemic.
• Quant Small Cap Fund - 22.1% CAGR over 5 years. This one surprised everyone. It uses algorithmic stock selection and focused on micro-cap stocks that exploded after 2020. But it’s volatile-down 30% in 2022, then up 60% in 2023.
• Canara Robeco Emerging Equities - 17.9% CAGR over 10 years. Strong risk-adjusted returns. Never had more than 10% in any single stock.

Notice something? None of these are index funds. They’re actively managed, and they bet on companies that aren’t household names yet. The biggest winners didn’t just ride the Nifty 50-they found the next ones.

Why Past Performance Isn’t a Guarantee

In 2021, the Axis Small Cap Fund was the top performer, returning over 110%. By 2023, it was down 40%. Why? Because small caps got overvalued. Investors piled in, prices inflated, and when sentiment shifted, they crashed. The same thing happened with thematic funds like digital economy or EV funds in 2022.

There’s a pattern: the funds with the highest returns in any 1- or 2-year window are usually the ones with the highest risk. They’re concentrated in one sector, one market cap, or one trend. When that trend reverses, returns reverse too.

The S&P BSE SmallCap Index returned 15% annually from 2016 to 2021. But from 2021 to 2024, it returned just 3%. That’s not a flaw in the fund-it’s the market. And that’s why you need to look beyond the headline number.

What You Should Actually Look For

Stop chasing the highest return. Start asking:

• How consistent are the returns? Look at 5-year and 10-year CAGR. If the 1-year return is 50% but the 5-year is 10%, something’s off.
• What’s the Sharpe ratio? This measures return per unit of risk. A fund with 18% return and a Sharpe ratio of 1.2 is better than one with 22% and 0.6.
• Who’s managing it? Has the fund manager stayed for 5+ years? Turnover in fund management is a red flag.
• What’s the portfolio like? If 40% of the fund is in just three stocks, you’re not diversified-you’re gambling.
• How did it perform in downturns? Did it lose 25% when the market lost 30%? That’s good. Did it lose 40%? That’s risky.

Parag Parikh Flexi Cap Fund is a great example. It didn’t have the highest return in 2020 or 2021. But in 2022, when most funds dropped 15-20%, it dropped just 5%. That’s the kind of resilience that builds wealth over time.

Don’t Ignore Costs

A fund with 20% return sounds amazing-until you realize it charges 2.5% in expense ratio. After fees, your real return is 17.5%. Compare that to a low-cost index fund with 14% return and 0.2% fees. Your net gain? 13.8%. The difference compounds over time.

Some of the top-performing funds have higher expense ratios because they’re actively managed. But if the manager isn’t adding value-just trading more-then you’re paying for noise. Check the portfolio turnover ratio. If it’s over 100%, you’re likely paying for trading costs, not skill.

What About Index Funds?

Index funds like the Nippon India Index Fund Nifty 50 or UTI Nifty 50 Index Fund don’t aim to beat the market-they aim to match it. Over the last 10 years, the Nifty 50 returned around 14% CAGR. That’s solid. And you pay less than 0.2% in fees.

If you want simplicity, low cost, and steady growth, index funds are the smart choice. But if you want to outperform, you need active management. The key is knowing the trade-off: higher potential return, higher risk, higher cost.

Real Advice for Real Investors

Here’s what works in practice:

1. Don’t pick one fund. Build a portfolio of 3-4 funds across large-cap, flexi-cap, and small-cap.
2. Use SIPs. Invest ₹5,000 every month. It smooths out volatility and removes emotion.
3. Rebalance once a year. If one fund grew too big, sell a bit and buy more of the underperforming ones.
4. Ignore daily news. The market will go up and down. Your job is to stay invested.
5. Check your funds every 18 months-not every month.

One investor started SIPs in Parag Parikh Flexi Cap and Kotak Emerging Equity in 2018. He added ₹10,000/month. By 2025, his portfolio was worth ₹58 lakhs. He didn’t time the market. He didn’t chase returns. He just stayed consistent.

Final Answer: What’s the Highest Returning Fund?

If you’re asking for a single name based on 10-year performance, Nippon India Growth Fund leads among actively managed funds. But if you’re asking which one you should invest in today? The answer is: it depends.

Choose a fund that fits your risk profile, not your ego. Don’t pick the one with the flashiest return. Pick the one with the cleanest track record, the lowest turnover, the most stable manager, and the lowest fees. That’s how you win-not by chasing the top performer, but by avoiding the bottom performers.

The best mutual fund isn’t the one that made the most money last year. It’s the one you’ll still hold ten years from now.