Investing in mutual funds is not just about investing money but about sticking with the right fund. Real success in the world of investing comes from consistency. Recently 180 equity mutual fund schemes were analyzed, in which a shocking fact came to light.
Out of total 180 schemes, only 7 such schemes were found which have provided CAGR (Compound Annual Growth Rate) of more than 20% in each time interval of last 3, 5 and 7 years.
If you are looking to strengthen your investment portfolio in 2026, the performance of these “Top 7” funds can be an important point of research for you.
What Does 20% CAGR Mean for Investors?
The power of 20% CAGR can significantly accelerate wealth creation. In the financial world, an annual return of 20% is considered an ideal standard.
If a fund consistently gives returns at 20%, your money doubles in approximately 3.6 years. Maintaining this momentum for 7 years is a testament to the efficiency of the fund managers and a sound investment strategy.
List of 7 Best Performing Mutual Funds (2026)
The most special thing about this list is that it is dominated by mid-cap funds. Out of these 7 funds, 6 belong to the mid-cap category, clearly indicating that mid-cap companies are best suited for long-term wealth creation.
| Fund Name | 3-Year CAGR | 5-Year CAGR | 7-Year CAGR |
|---|---|---|---|
| Edelweiss Mid Cap Fund | 24.58% | 22.85% | 21.95% |
| Motilal Oswal Midcap Fund | 21.94% | 24.92% | 21.70% |
| Invesco India Smallcap Fund | 21.30% | 22.89% | 21.46% |
| Nippon India Growth (Mid Cap) | 23.19% | 22.47% | 21.34% |
| HDFC Mid Cap Fund | 24.16% | 23.95% | 21.19% |
| Invesco India Midcap Fund | 24.40% | 21.29% | 20.43% |
| Mahindra Manulife Mid Cap Fund | 22.64% | 21.96% | 20.13% |
This trend shows that mid-cap mutual funds offer a strong balance between growth potential and manageable risk over longer investment horizons.
Why Mid-Cap Funds Are Wealth Creators
There are several reasons why these funds have performed consistently well over the years.
Growth potential of mid-cap companies
Mid-cap companies are those that have the potential to become large-cap companies in the future. Funds like Edelweiss and HDFC have timely identified businesses that have rapidly grown their market share over the last seven years.
The only winner in the small-cap category
Surprisingly, from the entire small-cap category, only Invesco India Smallcap Fund could make it to the list. Small-cap funds are generally very volatile, but this fund has maintained an excellent balance between risk and returns.
Strength in market fluctuations
These funds not only delivered profits during bull markets but also protected investors’ capital when markets declined. Their downside protection capability makes them different from many other equity funds.
Risks to Consider Before Investing
Although past performance has been excellent, investors should carefully evaluate certain factors before investing.
Taxation:
As per the rules of the year 2026, tax will be payable at the rate of 12.5% on long-term capital gains (LTCG) for investments held for more than one year, if the profit exceeds ₹1.25 lakh.
Expense Ratio:
Always select a Direct Plan with a low expense ratio to maximize your returns over the long term.
SIP vs Lumpsum – What Is Better?
Investing through a Systematic Investment Plan (SIP) rather than investing a lump sum amount in these funds is considered the best way to reduce risk. SIP helps average out market volatility and encourages disciplined investing over time.Frequently Asked Questions (FAQs)
Can mutual funds give 20% returns for 7 years?
Yes, but only a few mutual funds with strong long-term consistency, disciplined fund management and the ability to perform across different market cycles can achieve such returns.
Are mid-cap mutual funds risky?
Mid-cap mutual funds are volatile in the short term, but they can be suitable for investors who have a long-term investment horizon of 5 to 7 years.
Is SIP better than lump sum investment?
Yes, SIP helps reduce market timing risk and improves consistency by spreading investments over time.
Conclusion
You can create wealth through mutual funds, but high returns are not the secret — it is the ability to keep with the funds that are performing constantly. These seven mutual funds can build a strong portfolio of your analysis of investment in case you intend to invest between a period of 5 years and 10 years.
Do you include any of these funds in your portfolio? Let us know your thoughts in the comments below.
Disclaimer:
Mutual fund investments are subject to market risks. Be sure to consult your financial advisor before investing.
