The Motilal Oswal Nifty Microcap 250 Index Fund delivered a 24.7% return over the last three months, topping the index fund category for assets over ₹1,500 crore. While it leads in the short term, investors should note that performance leadership varies significantly across longer timeframes compared to international and smallcap peers.
The Motilal Oswal Nifty Microcap 250 Index Fund has recorded the highest returns among index funds with an asset base of at least ₹1,500 crore, posting a 24.7% gain over the three-month period ending July 7, 2026. This performance places it ahead of other notable funds in the category, such as the ICICI Prudential NASDAQ 100 Index Fund, which returned 23.3%, and the SBI Nifty Smallcap 250 Index Fund, which delivered 20.4% during the same window.
Comparing Performance Trends
While the Motilal Oswal Nifty Microcap 250 Index Fund shows strong recent momentum, market data indicates that leadership changes significantly when looking at longer horizons. For example, the ICICI Prudential NASDAQ 100 Index Fund has demonstrated consistent performance in the medium-to-long term, leading the one-year returns chart with a 41.8% gain. It also holds the top spot for three-year returns, delivering 30.2%.
The performance of the Motilal Oswal Nifty Microcap 250 Index Fund is also notable relative to its specific benchmark. According to recent data, the fund outperformed its underlying index by 6.1 percentage points over the past year. In the three-year period, this margin of outperformance reached 12.4 percentage points, as the benchmark index itself recorded a 9.3% return.
Investor Context on Microcap Volatility
For investors evaluating these results, it is important to understand that microcap funds invest in the smallest companies listed on the stock exchange. These companies often carry higher risks, including lower liquidity—meaning it may be harder to buy or sell large quantities of shares without impacting the price—and higher sensitivity to market downturns compared to large-cap or international index funds.
When choosing between these funds, investors should consider their own time horizon and comfort with risk. A fund that performs well over three months may be driven by specific sector movements or high market volatility rather than consistent long-term growth. Because index funds simply track a set list of companies, they do not have a fund manager actively trying to avoid risky stocks, which means the fund’s performance will rise and fall exactly in line with its benchmark. Monitoring the tracking error—the difference between the fund's returns and the benchmark’s returns—is a key metric to track, as it measures how efficiently the fund replicates the index's performance.