Five Mutual Funds Outperform Nifty 50 Over Ten Years, Offering Investors Higher Wealth Creation

A decade of performance is a strong indicator of a fund's ability to generate returns through skillful management rather than just market timing. In India, the Nifty 50 Total Return Index (TRI), representing the top 50 large and liquid stocks, is a common benchmark for long-term investors. It returned a Compound Annual Growth Rate (CAGR) of 13.75% over the ten years ending November 6, 2025.

Five actively managed mutual funds have managed to surpass this benchmark. These funds were identified using the Financial Express Mutual Fund Screener based on their ability to deliver a higher ten-year CAGR than the Nifty 50 TRI. The selected funds are Quant ELSS Tax Saver Fund – Direct Plan, Nippon India Small Cap Fund – Direct Plan, Quant Infrastructure Fund – Direct Plan, Invesco India Midcap Fund – Direct Plan, and Quant Small Cap Fund – Direct Plan. All returns are on a CAGR basis and represent regular growth options, considering only open-ended schemes with at least a ten-year track record.

These top-performing funds include: 1. **Quant ELSS Tax Saver Fund:** Achieved a 22.00% CAGR, holding stocks like Adani Power, Reliance Industries, and Larsen & Toubro. It has a very high risk rating. 2. **Nippon India Small Cap Fund:** Posted a 21.65% CAGR, with holdings including Multi Commodity Exchange of India and Kirloskar Brothers. It also carries a very high risk rating. 3. **Quant Infrastructure Fund:** Delivered 20.37% CAGR, focusing on infrastructure stocks like Larsen & Toubro, Adani Power, and Tata Power. It has a very high risk rating. 4. **Invesco India Midcap Fund:** Grew at 20.32% CAGR, holding companies such as Swiggy, AU Small Finance Bank, and L&T Finance. It is rated very high risk. 5. **Quant Small Cap Fund:** Recorded 20.29% CAGR, with core holdings including Reliance Industries, Jio Financial Services, and RBL Bank, and is rated very high risk.

**Drivers of Outperformance:** Factors contributing to these funds' success include strategic investments in smaller companies during upward market cycles, concentrated bets in sectors like energy, infrastructure, and financials, and disciplined portfolio churn. Moderate expense ratios also helped preserve investor gains.

**Impact:** This news is highly relevant for Indian stock market investors, particularly those focused on long-term wealth creation and considering equity mutual funds. It highlights the potential for active management to deliver alpha (returns above the benchmark) over extended periods. However, it's crucial to note that these outperforming funds often carry a 'very high' risk rating due to their exposure to mid-cap, small-cap, or specific sectors. Investors should consider their risk tolerance and investment horizon before investing. Past performance is not indicative of future results. Funds that have thrived in mid and small-cap led markets might not perform similarly in all market conditions.

**Impact Rating:** 8/10 (High impact for long-term equity investors in India).

**Difficult Terms Explained:** * **CAGR (Compound Annual Growth Rate):** The average annual rate of return of an investment over a specified period longer than one year, assuming that profits are reinvested at the end of each year. It provides a smoothed-out return, representing linear growth. * **Nifty 50 Total Return Index (TRI):** An index that represents the performance of the top 50 largest and most liquid Indian companies listed on the National Stock Exchange. The 'Total Return' aspect means it accounts for both price appreciation and dividend reinvestment, offering a comprehensive measure of market performance. * **Mutual Funds:** A type of financial vehicle made up of a diversified portfolio of stocks, bonds, or other securities. They allow investors to pool their money to invest in a broader range of assets than they might be able to on their own. * **SIP (Systematic Investment Plan):** A method of investing a fixed amount of money at regular intervals (e.g., monthly) into a mutual fund scheme. It helps in rupee cost averaging and disciplined investing. * **NAV (Net Asset Value):** The per-share market value of a mutual fund. It is calculated by taking the total value of the fund's assets, subtracting liabilities, and dividing by the number of outstanding shares. * **AUM (Assets Under Management):** The total market value of all the assets that a fund manages on behalf of its investors. A higher AUM often indicates a fund's popularity and scale. * **Expense Ratio:** The annual fee charged by a mutual fund to cover its operating expenses, expressed as a percentage of the fund's assets. A lower expense ratio means more of an investor's money stays invested. * **Portfolio Turnover Ratio:** A measure of how frequently a fund buys and sells its holdings. A high turnover ratio suggests active trading, while a low ratio indicates a more buy-and-hold strategy. * **Small-cap, Mid-cap, Large-cap:** These terms refer to the market capitalization (total market value of a company's outstanding shares) of companies. Large-cap companies are generally well-established, mid-cap companies are of medium size, and small-cap companies are smaller but potentially offer higher growth. * **ELSS (Equity Linked Savings Scheme):** A type of diversified equity mutual fund that offers tax benefits under Section 80C of the Income Tax Act, 1961, in India. They typically have a lock-in period of three years. * **Active Management:** An investment strategy where a portfolio manager makes specific buy and sell decisions to try and outperform a benchmark index, as opposed to passive management which aims to replicate an index's performance.