Equity invest primarily in stocks across large-cap, mid-cap, and small-cap segments, spanning different sectors and industries. Several funds have delivered strong returns over the past five years, even through periods of market uncertainty and fluctuations.
So, let’s take a look at the top five performing diversified equity funds.
Top 5 diversified equity mutual funds with the highest long-term returns
| Fund Name | 5-Year Returns |
| Motilal Oswal Midcap Fund | 22.88% |
| Invesco India Smallcap Fund | 22.16% |
| Invesco India Mid Cap Fund | 21.94% |
| Bandhan Small Cap Fund | 29.54% |
| Nippon India Growth Mid Cap Fund | 21.56% |
*CAGR Returns as on 25 June, 2026, Direct Plans, Source: Value Research, Excluding Sectoral Funds
If you had invested ₹1 lakh as a lump sum in the Motilal Oswal Midcap Fund, your investment would have grown to approximately ₹2.8 lakh over the last five years, reflecting its long-term growth potential.
Based on this data, it is clear that mid-cap and small-cap funds dominate the list, highlighting their strong return potential despite higher volatility.
How these top 5 funds differ?
A closer look at the top-performing diversified equity mutual funds reveals a clear pattern of differentiated strategy.
Motilal Oswal Mid Cap Fund
This mid-cap fund has highly concentrated mid-cap positioning, with 80.86% allocation to mid-cap stocks. Large-cap exposure is 19.14% with no small-cap holdings. The fund remains invested in equities at 93.37%, with 6.63% in cash holdings.
Its portfolio tilts towards , , and .
Invesco India Smallcap Fund
With 66.45% exposure to small-cap stocks, it clearly prioritizes early-stage and high-growth companies.
The fund is also nearly fully invested in equities at 98.91%, leaving very little in cash at 1.09%. Its top 3 holdings include , , and .
Invesco India Mid Cap Fund
This mid-cap fund presents a relatively more balanced structure within the mid-cap category.
While mid-caps still dominate at 64.90%, the fund maintains a more diversified cap mix with 18.14% in large caps and 16.96% in small caps, making it less concentrated than the Motilal Oswal Mid Cap Fund. Key holdings of this fund are , , and .
Bandhan Small Cap Fund
Bandhan Small Cap Fund combines aggressive small-cap positioning with a slightly more defensive structural buffer.
While 77.12% of assets are in small-cap stocks, the fund also maintains a comparatively higher 10.12% cash allocation. Its top holdings are , REC, and .
Nippon India Growth Mid Cap Fund
This mid-cap fund reflects a more balanced mid-cap strategy compared to the highly concentrated Motilal Oswal approach.
With 68.50% allocation to mid-caps, it maintains a stronger presence in large-cap stocks at 21.09%, and a smaller but notable 10.41% exposure to small caps. Its near-complete equity allocation of 99.01% signals higher market participation. The top holdings include , , and .
Disclaimer: This is purely for educational/ informational purposes and should not be taken as any investment advice. Always consult a SEBI-registered advisor before making any investment decisions.