Out of the top 10 highest-returning funds, nine belong to the small-cap and mid-cap categories. This group comprises four pure small-cap schemes and five mid-cap schemes, with the sole exception being an SBI flexi-cap fund. Notably, not a single actively managed large-cap fund features in this top 10 list.

Small-cap funds occupy the top two spots among the best-performing funds over a five-year period. Bandhan Small Cap Fund tops the list, delivering an annualized SIP return of 23.90% over five years. ITI Small Cap Fund ranks second, having generated an SIP return of 23.80% over the same period. Both funds also posted 3-year SIP returns of 17.93% and 19.84%, respectively.

Invesco India Mid Cap Fund ranks third on the list of mutual funds delivering impressive SIP returns, with a 23.43% return over five years and a 20.55% return over three years. Invesco India Smallcap Fund takes the fourth spot; it delivered an annualized SIP return of 22.87% over five years and 19.26% over three years.

HSBC Midcap Fund holds the fifth position, delivering an SIP return of 22.86% over five years and an impressive 20.40% over three years. Bank of India Small Cap Fund ranks sixth. This fund has delivered a return of 22.13% to SIP investors over a five-year period. In terms of three-year SIP returns, it has yielded 20.25%.

The SBI Children's Fund - Investment Plan ranks seventh on the list of funds delivering impressive SIP returns over five years. It secured the top spot in the Flexi-cap category by providing a 21.84% return to SIP investors over this five-year period; over three years, it delivered a return of 20.44%. The Edelweiss MidCap Fund holds the eighth position, having delivered an annualized SIP return of 20.77% over five years and generated wealth at a rate of 15.83% through three-year SIPs.

The ICICI Prudential Midcap Fund secured the ninth spot on the list with an annual SIP return of 20.47% over five years. Meanwhile, the Mahindra Manulife Mid Cap Fund took the tenth position, delivering an SIP return of 20.46% over the same five-year period.

Market experts believe that while small-cap and mid-cap funds have led the way in delivering high returns over the long term, they also carry the highest risk of volatility. This stellar performance occurred during a highly favorable and bullish phase of the stock market. Therefore, investors should bear in mind that there is no guarantee this historical trend from the past five years will be exactly replicated in the coming five years.

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