It is a good idea to invest in mutual funds in India in order to increase your money. With so many mutual funds, selecting the most suitable ones appears complicated. In 2025, the Indian mutual fund market is flourishing, with funds available for all kinds of investors—whether one prefers high returns or safety.
This blog will walk you through the 7 best mutual funds to invest in India for 2025 and provide answers to the age-old question: How many mutual funds do I need to have? We will keep things simple, straightforward, and chock-full of valuable tips to guide you in making informed investment decisions. Let’s start!
7 Best Mutual Funds in India for 2025
Here are seven best-performing mutual funds for 2025, wisely picked based on their history, consistency, and appropriateness for various financial objectives. Each fund is discussed to provide you with insights on why it’s a good option.
1. Nippon India Small Cap Fund
This fund invests in small-cap firms, i.e., small organizations with high growth prospects. It’s suitable for investors who don’t mind taking more risk for the possibility of higher returns. It has returned a whopping 23.52% CAGR over the last 10 years. The fund holds positions in industry segments such as capital goods, healthcare, and chemicals, with its leading holdings being HDFC Bank and Multi Commodity Exchange of India.
You can begin with a modest investment of ₹100 under SIP or ₹5,000 lump sum. But small-cap funds tend to be volatile, so it’s suitable for long-term plans (5+ years). Always see how the fund performed during a bad market to make sure it matches your risk level.
2. SBI Small Cap Fund
Another top-performing small-cap fund, the SBI Small Cap Fund boasts a good history with a 10-year CAGR of 22.61%. It invests in high-quality small-cap firms with good fundamentals, such as SBFC Finance and DOMS Industries.
This fund is balanced for growth and conservative and hence is marginally more risk-averse compared to other small-cap funds. One can invest just ₹500 under SIP or ₹5,000 as a lump sum. It is ideal for long-term wealth accumulation but needs endurance based on market volatility. Have a look at the sector allocation of the fund (finance, capital goods) to see if it aligns with your investment objectives.
3. Motilal Oswal Midcap Fund
This mid-cap fund is suitable for growth with moderate risk-seeking investors. It has given a 21.17% CAGR over 10 years and invests in mid-cap companies such as Persistent Systems and Coforge. The fund has a quality approach with an eye on companies with stable earnings. You can invest with ₹500 through SIP or ₹500 as a lump sum. Mid-cap funds are volatile but relatively safer than small-cap funds. This fund is suitable for investors with a 5-7 year horizon who want a balance between risk and reward.
4. HDFC Balanced Advantage Fund
For those who want a mix of equity and debt, the HDFC Balanced Advantage Fund is a top choice. It has delivered 21.94% returns over 3 years and manages a massive ₹95,569.87 crore AUM. This hybrid fund varies investments in line with market conditions, providing stability as well as growth. It’s best suited for investors with medium risk appetite. You can invest from ₹100 under SIP or ₹100 as lumpsum. The expense ratio for the fund is 1.35%, and it has a 1% exit load for redemptions made within a year. This fund suits medium- and long-term objectives such as purchasing a home.
5. ICICI Prudential Infrastructure Fund
A sectoral fund that invests in infrastructure stocks, offering 41.7% returns in 5 years. It’s a high-risk, high-return fund with investments in stocks such as Reliance Industries and HDFC Bank. You can invest ₹100 through SIP or ₹5,000 lump sum. It is appropriate for aggressive investors with a long-term investment horizon (7+ years) and faith in India’s infrastructure development. Verify the sector exposure of the fund and its performance history in market downtrends before investing.
6. Franklin Build India Fund
Another infra-themed fund, this one has provided 34.16% returns in 5 years. It invests in growth drivers like construction and energy companies. It has a minimum investment of ₹500 through SIP or ₹5,000 as a lump sum. Suitable for investors with high risk tolerance and a long-term goal, e.g., retirement planning. Always check the track record of the fund manager to see if the performance is consistent.
7. DSP Nifty 50 Equal Weight Index Fund
This index fund follows the Nifty 50 Equal Weight Index, providing a low-cost passive investment choice. It does not have a lock-in period and no exit load, so it is extremely flexible. It’s suitable for new investors or conservative investors who seek market-linked returns with reduced risk. You can invest from ₹100 through SIP or ₹100 as a one-time. It’s good for long-term wealth creation with low management fees.
Comparison Table
| Fund Name | Category | 5-Year CAGR | Min. SIP | Risk Level | Best For |
|---|---|---|---|---|---|
| Nippon India Small Cap Fund | Small-Cap Equity | 36.7% | ₹100 | Very High | Long-term wealth creation |
| SBI Small Cap Fund | Small-Cap Equity | 22.61% (10Y) | ₹500 | Very High | Long-term growth |
| Motilal Oswal Midcap Fund | Mid-Cap Equity | 33.48% | ₹500 | High | Medium-to-long-term growth |
| HDFC Balanced Advantage Fund | Hybrid | 28.84% | ₹100 | Moderate | Balanced growth and stability |
| ICICI Prudential Infrastructure | Sectoral (Infra) | 41.7% | ₹100 | Very High | Long-term aggressive investors |
| Franklin Build India Fund | Sectoral (Infra) | 34.16% | ₹500 | Very High | Long-term infrastructure bets |
| DSP Nifty 50 Equal Weight Index | Large-Cap Index | Not Available | ₹100 | Moderate | Beginners, passive investing |
Note: Returns are as of 2025 and may vary. Always check the latest NAV and performance before investing.
Conclusion
Picking the right mutual funds in 2025 can lead you to financial prosperity. The 7 best mutual funds mentioned above suit various levels of risk and purposes, ranging from high-growth small-cap funds such as Nippon India Small Cap to stable ones like DSP Nifty 50 Equal Weight Index Fund. When it comes to how many mutual funds to hold, shoot for 4-6 funds for optimal diversification and ease.
Always make your choices in harmony with your investment horizon, risk tolerance, and financial goals. Begin with SIPs in small quantities, check your portfolio from time to time, and take the help of a financial advisor if necessary. Invest smartly, and make money work for you!
FAQ
1. What are the best mutual funds for beginners in 2025?
Beginners should consider low-risk or moderate-risk funds like the DSP Nifty 50 Equal Weight Index Fund or HDFC Balanced Advantage Fund. These offer stability and growth with low minimum investments.
2. How many mutual funds are too many?
Owning more than 8-10 funds can lead to over-diversification, increasing fees and overlap. Stick to 4-6 funds for a balanced portfolio.
3. Can I start investing with ₹100?
Yes, many funds like Nippon India Small Cap and HDFC Balanced Advantage allow SIPs starting at ₹100, making them accessible for all investors.
4. Are small-cap funds risky?
Yes, small-cap funds like SBI Small Cap and Nippon India Small Cap are high-risk due to market volatility but offer high returns for long-term investors.
5. How do I choose the right mutual fund?
Consider your financial goals, risk tolerance, and investment horizon. Check the fund’s past performance, expense ratio, and fund manager’s track record before investing.
Disclaimer:
The information in this post is for educational and informational purposes only and does not constitute financial, investment, tax, or legal advice. Always do your own research and consider your personal financial situation before making any investment decisions. The stock market carries risks, and past performance is not a guarantee of future results. If you are unsure, consult a qualified financial advisor or tax professional.
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