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In 2025, over 7 million investors have already placed their bets on mutual funds for high returns and long-term wealth creation. Well, mutual funds continue to surprise us with new offerings like NFOs, choosing the best mutual fund to invest in 2025 has become more complex.
With so many options of equity, debt, hybrid and ELSS funds for tax saving, the doubt still remains that “How do you pick top-performing mutual funds in India”?
This blog will guide you through the best mutual funds, ensuring you get low-risk options with high returns.
Key Factors of Mutual Fund
Here are a few key factors of Mutual Funds:
- Compounding: It grows faster as with passing time and the longer you leave your money invested, the more it grows. That is why long-term mutual funds can be such a smart addition for your financial journey.
- Diversification: This spread your money over different types of investments like stocks, bonds or other assets. It mitigates the risk of losing money because if one part of the market not perform well, other areas will cover it.
- Professional Management: An expert fund manager tracks the market and makes informal research-based decisions. They manage your funds on your behalf with the right direction and strategy.
- Discipline: This is prime factor for long-term success. Mutual funds do not provide high returns overnight, but if you stay invested for the long term, you will observe the power of consistent growth.
- Tax efficiency: Some mutual funds reduce taxes for you, simply, you get to keep more of your returns. This will help you for long-term investments, which boost your wealth over time.
Let us address the common dilemma of how to pick the right mutual fund to invest in India.
How to Choose the Right Mutual Fund to Invest in India?
Here is how you figure out the right mutual fund to invest in India with these simple steps
- Define Your Investment Profile
Before start investment know your goals like retirement, wealth growth or short-term needs and risk tolerance.
- Choose the Right Fund Type
Pick funds like equity, debt, hybrid or ELSS funds based on your risk suitability and goals.
- Review Fund Performance
Before investing check the fund’s history, expense ratio and fund manager track record over years.
- Decide on an Investment Method
Choose between SIPs for regular investing or a lumpsum for large sum investments.
Start Your SIP TodayLet your money work for you with the best SIP plans.
Pro Tip: Calculate your compounding returns using the SIP calculator.
Now, let’s explore the best mutual funds to invest in 2025, with top-performing options and their returns.
List of Best Mutual Funds to Invest in 2025
Here are top 5 best mutual funds to invest in 2025 with their category, AUM, 3 years and 5 years returns:
1. Top Equity Mutual Funds
These funds are high-growth funds investing in stocks, perfect for those investor who wants higher returns with moderate risk.
| Fund Name | Launch Date | Category | AUM (cr) | 3 Years Returns | 5 Years Returns |
|---|---|---|---|---|---|
| Nippon India Large Cap Fund | 08-08-2007 | Equity: Large Cap | Rs 44,165 | 19.18% | 23.97% |
| Edelweiss Mid Cap Fund | 26-12-2007 | Equity: Mid Cap | Rs 11,027 | 23.50% | 29.09% |
| Bandhan Small Cap Fund | 01-02-2020 | Equity: Small Cap | Rs 14,062 | 28.31% | 30.66% |
| Invesco India Contra Fund | 11-04-2007 | Equity: Contra | Rs 19,288 | 19.55% | 22.12% |
| Nippon India Multi Cap Fund | 25-03-2005 | Equity: Multi Cap | Rs 45,881 | 22.70% | 29.50% |
2. Top Debt Mutual Funds
It is safer funds investing in bonds, offering stable returns with lower risk for conservative investors.
| Fund Name | Launch Date | Category | AUM (cr) | 3 Years Returns | 5 Years Returns |
|---|---|---|---|---|---|
| ICICI Pru Short Term Fund | 01-10-2001 | Debt: Short Duration | Rs 22,070 | 7.66% | 6.41% |
| SBI Magnum Medium Duration Fund | 12-11-2003 | Debt: Medium Duration | Rs 6,589 | 7.46% | 6.28% |
| ICICI Pru All Seasons Bond Fund | 01-05-2009 | Debt: Dynamic Bond | Rs 15,051 | 7.66% | 6.48% |
| ICICI Pru Gilt Fund | 19-08-1999 | Debt: Gilt | Rs 7,330 | 7.79% | 6.17% |
| Nippon India Banking & PSU Fund | 10-05-2015 | Debt: Banking & PSU Debt | Rs 5,684 | 7.20% | 5.86% |
3. Top Hybrid Mutual Funds
In this fund a balanced mix of equity and debt, providing a consistent growth option and reduced risk.
| Fund Name | Launch Date | Category | AUM (cr) | 3 Years Returns | 5 Years Returns |
|---|---|---|---|---|---|
| SBI Conservative Hybrid | 25-03-2001 | Hybrid: Conservative | Rs 9,799 | 10.98% | 9.03% |
| ICICI Pru Equity & Debt | 05-11-1999 | Hybrid: Aggressive | Rs 44,605 | 19.35% | 25% |
| HDFC Balanced Advtg Fund | 01-02-1994 | Hybrid: Dynamic Asset Allocation | Rs 1,01,773 | 18.31% | 22.93% |
| Nippon India Multi Asset Allocation Fund | 10-08-2020 | Hybrid: Multi Asset Allocation | Rs 6,649 | 19% | 17.59% |
| HDFC Equity Savings Fund | 05-09-2004 | Hybrid: Savings | Rs 5,674 | 10.20% | 12.17% |
4. Best ELSS Funds (for Tax Saving under 80C)
Tax-saving mutual funds that offer both tax benefits and long-term growth potential.
| Fund Name | Launch Date | Category | AUM (cr) | 3 Years Returns | 5 Years Returns |
|---|---|---|---|---|---|
| Bandhan ELSS Tax Saver Fund | 26-12-2008 | Equity: ELSS | Rs 6,974 | 14.96% | 22.91% |
| DSP ELSS Tax Saver Fund | 05-01-2007 | Equity: ELSS | Rs 16,981 | 18.64% | 23% |
| HDFC ELSS Tax Saver Fund | 05-03-1996 | Equity: ELSS | Rs 16,579 | 21.45% | 24.79% |
| Parag Parikh ELSS Tax Saver Fund | 07-07-2019 | Equity: ELSS | Rs 5,538 | 19% | 21.94% |
| SBI ELSS Tax Saver Fund | 31-03-1993 | Equity: ELSS | Rs 30,271 | 23.45% | 25.00% |
Looking for mutual funds that can deliver outstanding returns over the next decade.
Best Mutual Funds for the Next 10 Years: A Future-Focused Approach
Here is a brief look at some of the best-performing mutual funds with their 3-year annualized returns, making them a strong recommendation with a focused approach for long-term investments:
| Mutual Fund | 3-Year Return | 5-Year Return | AUM (Rs Crores) |
|---|---|---|---|
| SBI PSU Fund | 30.62% | 30.53% | 5,278.16 |
| Motilal Oswal Midcap Fund | 27.30% | 33.08% | 1,17,829 |
| ICICI Prudential Infrastructure Fund | 27.30% | 34.02% | 7,941.20 |
| Invesco India Midcap Fund | 26.28% | 27.74% | 11,845.25 |
| Quant Small Cap Fund | 25.07% | 36.73% | 29,462.70 |
- SBI PSU Fund stands as a top choice for investors looking for high returns with a focus on public sector enterprises.
- Motilal Oswal Midcap Fund is ideal for those investors looking for growth in mid-sized companies with a higher risk appetite.
- ICICI Prudential Infrastructure Fund benefits from India’s infrastructure growth, making it a great option for long-term investments.
- Invesco India Midcap Fund provides strong growth potential in the mid-cap space.
- Quant Small Cap Fund offers an aggressive growth opportunity with higher risk in small-cap stocks.
Also Read: How to Calculate Tax On Mutual Fund Redemption?
Now take a closer look at how mutual funds can be a secure option for long-term growth.
Is Mutual Fund Safe for the Long Term?
Mutual funds, can be a safe investment option for long-term goals as they offer diversification, expert management and have historically outperformed other investment types like fixed deposits.
The key is to pick the right fund based on your risk capacity & long-term goals. But it depends on the type of fund you choose, such as equity funds, debt funds and Hybrid funds.
Mutual funds allow you to build wealth over time with low-risk options for high return compared to individual stocks. However, like any investment, they are subject to market risks.
Don't Miss: What is Risk in Mutual Fund and Its Types?
Smart Investments, Bigger Returns
Conclusion
To wrap up, choosing the best mutual funds for 2025 can be overwhelming, but with the right strategy and knowledge, you can make informed financial planning. By focusing on low-risk, high-return options that suit your financial goals, you can build a strong and diverse investment portfolio.
Always remember to consider your risk tolerance, investment duration and the fund's track record before considering the best mutual fund for you.
Frequently Asked Questions
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What is the expected return on mutual funds in 2025?
Equity mutual funds usually give returns between 12%–15% per year, while debt funds offer 6% and 8%. Keep in mind, returns can change based on market trends.
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What are ELSS funds and why are they a good choice in 2025?
ELSS funds are tax-saving funds under Section 80C, provide both tax benefits and potential high returns. They are perfect addition for long-term investors looking to save on taxes.
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How do mutual funds work in 2025?
Mutual funds pick money from retail investors to invest in a mixture of stocks, bonds or securities.
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Are there any tax benefits when investing in mutual funds in 2025?
Yes, ELSS funds give tax benefits under Section 80C. Also, long-term gains from equity funds over Rs 1 lakh are taxed at 10%, while debt and hybrid funds have different tax rules based on their holdings.
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How should I diversify my mutual fund portfolio for 2025?
Diversify by mixing equity funds (60%), debt funds (30%) and hybrid funds (10%) to reduce risk and balance growth with stability.
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