Best Mutual Funds to Invest in 2025

Systematic Investment Plans (SIPs) have become a reliable strategy for navigating market fluctuations, especially in today’s unpredictable economic climate. In September 2024 alone, SIP inflows reached a remarkable Rs 24,509 crore, with over 66.39 lakh new accounts opened. Amid global uncertainties caused by geopolitical and economic shifts, SIPs provide a disciplined investment route, allowing investors to avoid market timing. The Indian SIP market continues to thrive, with AMFI reporting over 98.7 million accounts and monthly inflows exceeding Rs 15,000 crore.

Looking ahead, here are the three best mutual funds to invest in 2025. It offers diverse options for growth and resilience.

3 Best Mutual Funds for 2025

Here is the well-researched list of the best mutual funds for 2025 (for SIP investments). They are chosen for their consistent performance and potential to surpass category benchmarks.

Mutual Fund Scheme Name	5-year return in %	Category	Benchmark
Nippon India Small Cap Fund Direct	35.57	Small Cap Fund	Nifty Smallcap 250 TRI
Motilal Oswal Midcap Fund Direct Growth	32.42	Midcap Fund	Nifty Large Midcap 250 TRI
Parag Parikh Flexi Cap Fund Direct Growth	25.75	Flexi Cap Fund	Nifty 500 TRI

1. Nippon India Small Cap Fund Direct

Introduced on January 1, 2013, the Nippon India Small Cap Fund Direct is a small-cap equity fund with a very high risk profile. It is one of best mutual funds to invest in 2025. The NIFTY Smallcap 250 Total Return Index serves as its benchmark. As of November 2024, the fund’s most recent NAV (net asset value) stands at ₹187.426.

Over the past year, the fund has achieved a growth return of 34.49%. Since its inception, it has consistently delivered an impressive average annual return of 26.96%. Remarkably, the fund has historically doubled investments approximately every three years.

Performance Highlights:

• Consistency in Returns: Among its peers, this fund is recognized for its reliability in delivering consistent returns within its category.
• Outstanding Performance: Over the past decade, it has outperformed other small-cap funds, offering the highest returns.
• Investment Probability: Investors who held their investments for at least five years have seen annual returns of 17.13% in 70% of cases.
• Risk-Adjusted Returns: For every unit of risk taken, the fund generates returns that are 20% higher than its risk exposure.
• Volatility Management: While effective in generating returns, the fund ranks lower in mitigating volatility within its category.
• Exit Load: An exit load of 1% applies if the investment is redeemed within one year.

Fund Overview

VRO rating	5/5
Expense ratio	0.68%
Exit load	1.00%
Lock-in	No Lockin
Risk	Very Risk
Age	11 yrs 10 m since Jan 01, 2013
Minimum Investment	SIP ₹500
AUM (Fund size)	₹61,027 Crore
Benchmark	NIFTY Smallcap 250 TRI
Short term capital gains (STCG)	Returns taxed at 20% if redeemed before 1 year
Long term capital gains (LTCG)	After 1 year, pay tax of 12.5% on returns of ₹1.25 lakh+ in a financial year
Top 5 holdings of the fund	Multi Commodity Exchange Of India Ltd., HDFC Bank Ltd., Tube Investments Of India Ltd., Apar Industries Ltd., and Kirloskar Brothers Ltd..

Also Read: Importance of Financial Planning: Steps to Plan & Benefits

2. Motilal Oswal Midcap Fund Direct Growth

The Motilal Oswal Midcap Fund Direct-Growth was introduced on February 24, 2014, as an equity mutual fund. Its primary goal is to deliver long-term capital growth by investing in mid-cap companies. As of November 2024, the latest NAV stands at ₹116.424. Over the past year, the fund has generated an impressive 59.12% return. Since its inception, it has consistently delivered average annual returns of 25.71%, effectively doubling investments approximately every two years.

Performance Highlights:

• Consistent Returns: This fund consistently generates strong returns over time within its category.
• Superior Performance: It has outperformed all other mid-cap funds in terms of returns over the last decade.
• Volatility Management: Despite its strong returns, the fund offers comparatively less protection against market volatility within its category.
• Risk-Adjusted Returns: The fund’s performance on a risk-adjusted basis is lower than the average for its peers.
• Exit Load: Redeeming the investment within a year imposes an exit load of 1%.

Fund overview

VRO rating	5/5
Expense ratio	0.58%
Exit load	1.00%
Lock-in	No Lockin
Risk	Very Risk
Age	10 yrs 9 m since Feb 03, 2014
Minimum Investment	SIP ₹500  &  Lump. ₹1000
AUM (Fund size)	₹20,056  Crore
Benchmark	NIFTY Midcap 150 TRI
Short term capital gains (STCG)	Returns taxed at 20% if redeemed before 1 year
Long term capital gains (LTCG)	After 1 year, pay tax of 12.5% on returns of ₹1.25 lakh+ in a financial year
Top 5 holdings of the fund	Coforge Ltd., Kalyan Jewellers India Ltd., Polycab India Ltd., Persistent Systems Ltd., and JIO Financial Services Ltd.

3. Parag Parikh Flexi Cap Fund Direct Growth

The Parag Parikh Flexi Cap Fund Direct Growth, introduced on May 24, 2013, is an equity-flexi cap fund designed to achieve long-term capital appreciation. It benchmarks itself against the Nifty 500 Total Return Index. As of 2024, the fund’s net asset value (NAV) stands at ₹85.74.

Performance Highlights:

• 1-Year Returns: The fund has delivered a robust return of 30.93% over the past year.
• Historical Performance: Since its inception, it has generated an impressive 20.59% average annual return, effectively doubling investments approximately every four years.
• Volatility Shield: Among its peers, it is one of the most effective in minimizing the impact of market fluctuations.
• Superior Performance: Over the past decade, it has consistently outperformed other funds in the flexi-cap category.
• Historical Success Rate: In 70% of instances, investors holding this fund for at least five years have earned an annual return of 16.64%.
• Risk-Adjusted Returns: For every unit of risk taken, the fund generates returns that are 20% higher than comparable funds.

Exit Load Structure:

• For units exceeding 10% of the investment, an exit load of 2% is applicable if redeemed within 365 days.
• A 1% exit load is applied to redemptions made after 365 days but within 730 days.

Fund overview

VRO rating	5/5
Expense ratio	0.63%
Exit load	No exit load up to 10% of units
Lock-in	No Lockin
Risk	Very Risk
Age	11 yrs 6 m since May 13, 2013
Minimum Investment	SIP ₹500  &  Lump. ₹1000
AUM (Fund size)	₹81,919 Crore
Benchmark	NIFTY 500 TRI
Short term capital gains (STCG)	Returns taxed at 20% if you redeem before 1 year
Long term capital gains (LTCG)	After 1 year, pay tax of 12.5% on returns of ₹1.25 lakh+ in a financial year
Top 5 holdings of the fund	Power Grid Corporation Of India Ltd., Bajaj Holdings & Investment Ltd., Coal India Ltd., ITC Ltd., and Maruti Suzuki India Ltd.

Conclusion 

Investing in mutual funds through SIPs continues to be a prudent choice. It offers a disciplined approach to wealth creation. The Nippon India Small Cap Fund, Motilal Oswal Midcap Fund, and Parag Parikh Flexi Cap are the best mutual funds for 2025 due to their consistent performance, strong historical returns, and effective risk management. Each caters to different risk appetites and investment goals, making them ideal for diversifying portfolios. With thoughtful planning, these funds can help achieve long-term financial objectives amidst market uncertainties.