Best Mutual Funds to Invest in India - 2025

It has become one of the most preferred investments for Indian individuals to get the desired range of objectives such as wealth accumulation, tax efficiency, or fixed income. With thousands of schemes available in the market, finding the best mutual funds to invest in India for 2025 can be overwhelming. This paper seeks to demystify mutual funds through offering a brief background of mutual funds, and their category and best mutual funds suited to certain investors.

Types of Mutual Funds in India

The Indian mutual funds can be categorised by type of fund, risk factor and the kind of securities in which the fund invests. Here are the major types:

Equity Funds:
- Focus on investing in stocks.
- Suitable for long-term wealth creation.
- Its types are Large-cap funds, mid-cap funds, small-cap funds, and flexi-cap funds.
Debt Funds:
- Fix assets such as bonds, treasury bills, and debentures must be invested in order to grow the stock of funds for the business.
- It is also suitable for those who are very cautious and wish to have a steady income.
Hybrid Funds:
- The use of equity financing and debt financing should also be used in balanced manner so as to achieve both high returns and low risks.
- Some of the examples include balanced advantage funds as well as the asset allocation funds.
Index Funds:
- It include mutual fund investments that replicate index such as Nifty 50 or BSE Sensex.
- These ETFS are relatively cheap in terms of the expense ratios which allows the investor to enjoy returns with low fees.
Sectoral/Thematic Funds:
- Specialises in certain sectors like Information technology, health facility, or construction facility.
- Suitable for experienced investors with high-risk tolerance.
ELSS Funds (Equity Linked Savings Scheme):
- Together with these interests, an individual or an organisation can also get tax advantages under Section 80C of the Income Tax Act.
- Provide growth and income-generating securities that will have locks in for a period of 3 years.

Top 10 Mutual Funds in India - 2025

Bandhan Small Cap Fund Direct Growth
Motilal Oswal Midcap Fund Direct Growth
Edelweiss Mid Cap Fund Direct Growth
ICICI Prudential BHARAT 22 FOF Fund Direct Growth
ICICI Prudential Dividend Yield Equity Fund Direct Growth
Nippon India Growth Fund Direct Growth
HDFC Mid Cap Opportunities Fund Direct Growth
HDFC Focused 30 Fund Direct Growth
Motilal Oswal Large and Midcap Fund Direct Growth
Kotak Multicap Fund Direct Growth

Best Mutual Funds to Invest in India - 2025

Here’s a list of the best mutual funds in India for 2025, based on their performance and consistency across categories:

1. Bandhan Small Cap Fund Direct Growth

Bandhan Small Cap Fund focuses on identifying high-growth potential small-cap companies across sectors like finance, healthcare, and industrials. With a diversified portfolio and active management strategy, it has delivered impressive returns of 38.34% over 5 years. The fund is ideal for aggressive investors looking for long-term wealth creation through exposure to emerging businesses. Despite higher volatility compared to large caps, it offers excellent upside during bull markets. Investors should have a high-risk appetite and a long investment horizon to benefit fully. It also maintains a relatively low expense ratio, adding to its investor appeal.

Category: Small-Cap Equity

Launch Date: February 3, 2020

AUM: ₹9,516 Cr (as of March 31, 2025)

NAV: ₹45.59 (as of April 17, 2025)

Returns:

1-Year: 17.6%
5-Year: 38.34% CAGR

Expense Ratio: 0.64%

Why Invest: Targets high-growth potential in small-cap companies across sectors like financial services, healthcare, and industrials.

2. Motilal Oswal Midcap Fund Direct Growth

The Motilal Oswal Midcap Fund invests in fundamentally sound mid-cap firms that exhibit strong growth potentials. Professional fund managers lead this fund to success in rising market conditions through investments in potential market leader companies. This fund has delivered a strong compound annual growth rate of 23.35% throughout its existence. bénéfies de stratégies d’investissement bien dirigé et de rapports de portefeuille constants pour augmenter son capital dans le long terme. Such investors should choose this fund when they want aggressive returns and can accept market volatility over medium-term periods. The fund uses strict criteria when investing because it selects quality stocks with sustainable business models showing high return on equity.
Category: Mid-Cap Equity

NAV: ₹103.86 (as of April 17, 2025)

Returns:

1-Year: 14.79%
Since Inception: 23.35% CAGR

Expense Ratio: 0.64%

Why Invest: Focuses on mid-cap companies with strong fundamentals and growth prospects.

3. Edelweiss Mid Cap Fund Direct Growth

Edelweiss Mid Cap Fund gives its investors access to established mid-cap companies while maintaining a favorable ratio of risk versus returns. This fund concentrates its investments in the industrial and consumer cyclical sectors to exploit India’s changing economic fluctuations. The fund combines mid and small cap investments to provide steady and enduring long-term results. The fund suits investors who are willing to take moderate to high risks alongside desiring long-term growth of their capital base. Strong stock research coupled with agile management supports its investment strategy which targets mid-cap stocks for investors pursuing this group’s market growth potential.

Category: Mid-Cap Equity
Launch Date: January 1, 2013
AUM: ₹8,634 Cr (as of March 31, 2025)
NAV: ₹106.02 (as of April 17, 2025)
Portfolio Allocation: 8.85% in Large Cap, 34.1% in Mid Cap, 23.84% in Small Cap stocks citeturn0search12

Why Invest: Offers exposure to mid-cap stocks with a balanced risk-return profile.

4. ICICI Prudential BHARAT 22 FOF Fund Direct Growth

This fund of funds invests in the Bharat 22 ETF, providing access to a government-backed portfolio of 22 blue-chip companies across energy, finance, utilities, and infrastructure. ICICI Prudential BHARAT 22 FOF is designed for conservative investors looking for diversified exposure with relatively lower volatility. It is best suited for long-term investors seeking indirect exposure to public sector enterprises with solid fundamentals. The fund benefits from regular

Category: Equity Fund of Funds
Launch Date: July 2018
AUM: ₹2,206 Cr (as of March 31, 2025)

NAV: ₹22.45 (as of April 17, 2025)
Returns:
- 1-Year: 2.21%
- 5-Year: 34.89%
- Since Inception: 18.29% CAGR

Expense Ratio: 0.12%
Why Invest: Invests in the Bharat 22 ETF to get access to ministries backed stocks.

5. ICICI Prudential Dividend Yield Equity Fund Direct Growth

ICICI Prudential Dividend Yield Fund invests in dividend yield stocks to produce stable income while offering the possibility of capital growth. Conservative investors will benefit from this fund because it only selects quality companies which consistently distribute dividends along with maintain strong fundamentals. This fund demonstrates stability when markets become volatile because its income-producing aspect shields investors from loss. The fund spreads its investments across the utility and telecommunication sectors and the banking industry. This fund functions ideally as a secure choice for income delivery and it delivers well to retirees who want reduced market risk. The fund generates dependable returns but offers lower risk than small or mid-cap funds although its return potential is not as high.

Category: Dividend Yield Equity
NAV: ₹55.66 (as of April 17, 2025)
Returns:
- 1-Year: 6.81%
- 5-Year: 35.87%
- Since Inception: 16.64% CAGR
Expense Ratio: 0.73%

Why Invest: Concentrates on companies that have high dividend yield for the purpose of producing stable income and possible capital appreciation.

6. Nippon India Growth Fund Direct Growth

Nippon India Growth Fund serves as a seasoned multi-cap fund which distributes resources across large, mid and small-cap stock categories to provide investors with broad exposure to Indian stock markets. Angels Fund targets optimal returns by investing into sectors which demonstrate future-oriented growth potential. This fund stands out through its reliable operational performance and skilled stock identification abilities which allowed it to achieve a 28.7% CAGR across five years. This investment fund provides a suitable option for investors who want to accumulate wealth through a combination of stability along with aggressive growth opportunities. The fund distributes investment capital across multiple sectors so it minimizes risks through efficient portfolio allocation.

Category: Multi-Cap Equity
NAV: ₹1,800.45 (as of April 17, 2025)
Returns:
- 1-Year: 12.5%
- 5-Year: 28.7%
- Since Inception: 20.3% CAGR

Why Invest: Invests in both big, mid, and small cap to cross the risks of investment which might come with stock investing.

7. HDFC Mid Cap Opportunities Fund Direct Growth

The HDFC Mid Cap Opportunities Fund stands out as a popular mid-cap fund in India by demonstrating solid returns from its investment history. Mid-cap companies holding fundamental strength receive investment from this fund because they aim to achieve prolonged growth. This fund delivers consistent market-cycle performance because of its disciplined investment approach along with its focus on industrials sector and consumer goods sector. The fund fits best into the investment profiles of medium to high-risk tolerance investors who need long-term growth. The fund presents suitable opportunities to access mid-cap stocks effectively create wealth while maintaining reasonable protection against losses.

Category: Mid-Cap Equity
NAV: ₹106.08 (as of April 17, 2025)
Returns:
- 1-Year: 9.95%
- 5-Year: 33.29%
- 10-Year: 17.39%

Why Invest: Focuses on mid-cap companies with high growth potential and strong fundamentals.

8. HDFC Focused 30 Fund Direct Growth

HDFC Focused 30 Fund selects 30 specific high-potential stocks to invest in from all business sectors. Through its concentrated approach the fund manager performs deep studies about businesses with strong development prospects and strong core properties. The fund allocation mainly consists of large-cap blue-chip stocks which combines established security and promising risk-reward potential. Professional investors intending to access top-performing businesses through focused investments should consider this fund since it minimizes diversification risks. Even though it features a highly concentrated strategy the fund delivers performance levels comparable to its peers as an attractive investment solution for long-term oriented moderately aggressive investors.

Category: Focused Equity
Launch Date: January 1, 2013
AUM: ₹17,227 Cr (as of March 31, 2025)
NAV: ₹246.90 (as of April 17, 2025)

Why Invest: Concentrates on a portfolio of 30 high-conviction stocks.

9. Motilal Oswal Large and Midcap Fund Direct Growth

Large-cap companies in Motilal Oswal Large and Midcap Fund provide stability and mid-cap stocks deliver growth potential which creates an optimal investment opportunity. The fund makes it a priority to locate upcoming market leaders with solid performance projections across different industry sectors. The fund demonstrates superior performance against benchmarks at market highs because its management agencies use a focused strategy. Investors who want to balance risk with high potential returns should consider the fund because it pushes boundaries while maintaining a stable portfolio. The fund provides an appealing choice for investors who want to start building equity investments or need market-cap variety within one fund portfolio.

Category: Large and Mid-Cap Equity
NAV: ₹32.67 (as of April 21, 2025)
Returns:
- 1-Year: 16.37%
- Since Inception: 23.94% CAGR
Expense Ratio: 0.54%

Why Invest: Combines the stability of large-cap stocks with the growth potential of mid-cap stocks.

10. Kotak Multicap Fund Direct Growth

Kotak Multicap Fund provides investments across huge company segments along with mid and small cap assets which grants adaptability to market changes. The fund implements active stock selection through thorough research to identify businesses with powerful fundamentals along with sustained growth potential. This fund delivers satisfactory risk-to-return balance which makes it a good fit for people seeking multifaceted market exposure through a single investment. Since its founding the fund maintains steady maturity along with increasing appeal for retail investors. A medium-risk tolerant investor can achieve wealth growth by investing in this fund which provides a well-balanced effort-diverse stock portfolio.

Category: Multi-Cap Equity
Launch Date: September 8, 2021
AUM: ₹15,871 Cr (as of March 31, 2025)
NAV: ₹18.50 (as of April 17, 2025)
Returns:
- 1-Year:

Why Invest: Offers flexibility to invest across large, mid, and small-cap stocks.

History of Mutual Funds in India

The mutual fund industry in India dates back to 1963, with the establishment of the Unit Trust of India (UTI), the oldest mutual fund in India. Originally established in 1969-70, the promotion is to create awareness and habit of saving and investment among the common man by the Government of India and Reserve Bank of India. Key milestones include:

1987: The Entry of public sector mutual funds, such as SBI Mutual Fund and Canara Robeco Mutual Fund, expanded investment opportunities.
1993: Liberalisation of the industry and new entrants like HDFC and ICICI Prudential forced competition and innovation in the industry.
2003: The Uttar Pradesh government restructured UTI into UTI Mutual Fund, thus setting new high standards of fund management practice.
Current Era: The current era of the industry is governed by SEBI (Securities and Exchange Board of India) and has come up with more improved investment instruments and immense clarity for investors.

Pointers to Choose the Right Mutual Funds

To make the right investment decision, here are some pointers to help you select the best mutual funds to invest in India:

Define Your Goals: Do you have growth, income, tax break objectives? Investment funds should be selected according to the investor’s goals and aims.
Assess Your Risk Appetite: Equity funds come with higher risks but slightly higher returns as compared to debt funds which are relatively low-riskier and low return oriented.
Evaluate Fund Performance: The performance of the fund, on the one hand, should be checked at least over the last 3-5 years and compared to its standards.
Review Expense Ratios: Lower the expense ratios will make more net returns to the investors.
Check SEBI Registration: This is an important factor to consider especially if you want to invest in a mutual fund that you will be protected from fraudsters; ensure that the mutual fund is registered by SEBI, this helps give the investor confidence to invest in a particular fund.

Fund Manager Expertise: The expertise of a fund manager does matter a lot in the improvement of the fund.

Benefits of Investing in Mutual Funds

It is for these reasons that mutual funds have a number of advantages rendering them suitable for a wide class of investors:

Diversification: While investing, one should take up shares in different types of securities.
Professional Management: The fund managers employed are professionals with regards to investment.
Affordable Entry: It can be low as a result of Systematic Investment Plans (SIPs).
Tax Efficiency: Tax-saving funds such as ELSS aid in the reduction of taxable income.
Liquidity: The mutual fund unlike the closed-end funds that usually have limited subscription allows for early redemption at the current NAV.

Conclusion

As it will be seen, mutual funds offer various advantages so they can be used in meeting different financial objectives such as wealth creation, regular income, and tax purpose among others. With several options available in equity, debt, hybrid, and index categories, the best mutual funds in India for 2025 cater to diverse investor needs. Research, goal-setting, and awareness are however important when sourcing for the funds that best fit the portfolio.

Also Read : Motilal Oswal Share Price 2025: Fundamental Analysis