Top 5 index mutual funds with maximum returns in last 3 years

Top Index Mutual Funds: Mutual funds have emerged as a good investment choice in the last decade, given their good returns. However good returns they may deliver, mutual funds are always subject to market risk. A mutual fund performing better today can go down if the companies in which it has invested its money start faring poorly. So, for investors with a lower risk appetite looking for investments less prone to market performance, index funds have emerged as a good investment choice.

As the name suggests, index mutual funds mirror the market indexes that they follow. E.g., if an index mutual fund is mirroring the Nifty 50 benchmark, it will invest its money in the Nifty 50 companies.

So, the return that the index mutual fund would deliver will be the same or slightly different than the Nifty50 benchmark's performance.

The NSE Nifty and the BSE Sensex are the most popular indexes for index mutual fund investments.

Adhil Shetty, CEO, BankBazaar.com, says, "Direct investment in the stock markets is also profoundly risky for the average retail investor who has no idea what and when to buy, hold, or sell. Therefore, we say that index investing is a good enough way for the common man or woman to invest in the stock markets. The job of an index fund is to simply mimic market indices like Nifty 50 or Sensex, which havegenerated close to 13% annual returns on average in the last 10 years. If you had invested Rs 1,000 every month in a Nifty 50 fund in this period, you would have a corpus of around Rs 2.32 lakh over a total investment of Rs 1.2 lakh." 

Shetty adds, "Your money is essentially being invested into the corporate titans of India who are extremely good at managing costs and generating profits."

Santosh Joseph, Founder and Managing Partner, Refolio Investments and Germinate, says index funds are the 'ideal' funds for the long term. "It's a passive fund. It's in a sense a pre-decided nature of investing because the investment basket is dynamically managed based upon how an index is constituted. So therefore, for most investors, this is one investment avenue where there's no activity to be done, it is a passive play."

He further adds, "The need to participate in the markets without being actively involved is the solution index funds solve for investors."

Some of the benefits of index mutual fund investments can be-

• Since they are diversified, they reduce the risk associated with your portfolio.
• They have a low expense ratio, so it adds to the returns you receive on your investment in the long run.
• Since most of the companies in major indexes have a large market capitalisation and stablised performance, index mutual funds are also stable funds to quite a large extent.

In this write-up, we take you through the performance of the index mutual funds that have given the best returns in the last three years. 

Top 5 Index Funds in Last 3 Years 

Motilal Oswal Nifty Smallcap 250 Index Fund Direct - Growth

With 35.08 per cent annualised returns in the three years, Motilal Oswal Nifty Smallcap 250 Index Fund Direct - Growth tops the list of index mutual funds.

It has outperformed the category average of 34.84 per cent in the same period.

The net asset value (NAV) size for its Growth option of the Direct plan was Rs 28.93 as on November 17, while the expense ratio was 0.36 per cent for the direct plan as on October 31.

The fund was holding an asset under management (AUM) of Rs 499.78 as on November 17.

The minimum required investment for the fund is Rs 500, while the minimum SIP investment is also Rs 500.

An SIP of Rs 10,000 per month would have returned you Rs 5.40 lakh in the three-year period. 

Nippon India Nifty Smallcap 250 Index Fund Direct - Growth

This small-cap fund comes second in the list with an annualised return of 35.03 per cent in the three years.

The NAV size for its Direct plan under the Growth option was Rs 25.86 as on November 17.

The fund with Rs 799.23 crore AUM had an expense ratio of 0.32 per cent under its Direct plan as on October 31.

The minimum investment, the minimum additional investment, and the SIP investment are Rs 100 each.

An investment of Rs 10,000 in SIP every month would have given you returns of Rs 5.40 lakh in three years.

Motilal Oswal Nifty Midcap 150 Index Fund Direct - Growth

This mid-cap index fund has given 30.54 per cent returns in the last three years.

With a fund size of Rs 1111.99 crore as on November 17, the fund had a NAV size of Rs 27.97 for the Growth option of its Direct Plan.

The expense ratio for its Direct plan as on October 31 was 0.3 per cent.

The minimum investment, the minimum additional investment, and the minimum SIP investment for the fund are Rs 500 each.

An investment of Rs 10,000 in SIP every month would have converted into Rs 5.24 lakh.

DSP Nifty 50 Equal Weight Index Fund Direct - Growth

The large-cap index fund has given 23.62 per cent annualised returns in the three-year period.

The fund's AUM as on November 17 was Rs 834.45 crore, while the NAV size for the Direct plan was Rs 19.86 as on November 17.

The fund's Direct plan has an expense ratio of 0.4 per cent.

The minimum investment, the minimum addition investment, and the minimum SIP investment for the plan are Rs 100 each.

Had one started investing Rs 10,000 in SIP every month three years ago, they would have got Rs 4.68 lakh in today's date.

Sundaram Nifty 100 Equal Weight Fund Direct- Growth

This index fund has given annualised returns of 19.91 per cent in the last three years.

The fund had an AUM of Rs 65.55 crore, and the NAV size for the Direct option of its Growth plan was Rs 132.93, both as on November 17.

The fund's direct plan had an expense ratio of 0.57 per cent as on October 31.

The minimum investment, the minimum addition investment, and the minimum SIP investment for the plan are Rs 100 each.

An SIP investment of Rs 10,000 per month for the three years would have given you Rs 4.44 lakh.