Best Mutual Funds To Invest In 2025 For High Returns And Low Risk
In 2025, as living expenses soar and financial goals become more ambitious, finding the right investment strategy is essential. If you are wondering which are the best mutual funds in India in 2025, you are in the right place. This article provides a curated list of top-performing mutual funds that can help you grow your wealth effectively.
Whether you are looking for high returns, tax-saving options, or long-term growth, this guide will help you select the best mutual funds tailored to your goals. But before we dive into the list, let us understand the key factors to consider when choosing the ideal mutual fund for your needs.
How To Choose the Right Mutual Fund In 2025
Choosing the best mutual funds to invest in 2025 requires a complete plan along with an understanding of the factors for a better financial future. Here is how to choose the right one:
1. Investment Goal
An investment plan always needs an investment goal. With an investment goal, you can clearly understand the kind of mutual fund that will suit you better. A proper investment goal can be anything from down-payment of a house, retirement plans, funding education goals, and much more.
2. Risk Appetite
Risk appetite is nothing but your capacity or financial ability to withstand losses. It completely depends on how much risk you are willing to take during market fluctuations. The assessment of risk appetite will help you in managing your expectations from your returns while making sure that everything aligns perfectly with your goals.
3. Time Horizon
The time horizon of your investment plan can also determine which mutual fund is best for you. You can choose short to medium term goals (upto 5 years) to receive stable returns as they are less volatile. However, with long-term plans(5 years and above), you might get higher returns, but the risks of market fluctuation will also be high.
4. Fund Types
The different fund categories in mutual funds can be helpful in managing financial goals while decreasing risk tolerance. The types include large-cap funds, which offer stability and lower risk, small-cap funds, which have high growth potential but also have high risk, and index funds, which replicate market indices and are of low cost.
5. Role Of Expense Ratio, AUM, Fund Manager Track Record.
To make informed investment decisions, it’s essential to understand the key factors like expense ratio, Assets Under Management (AUM), and the fund manager’s track record. The expense ratio represents the annual fee charged by the fund, which directly affects your returns, it ensures your assets are efficiently managed. AUM reflects the total market value of the assets the fund manages, providing insights into its size and credibility.
Meanwhile, a fund manager’s track record offers a glimpse into their past performance, helping you evaluate how effectively they’ve managed funds in the past.
Additionally, you do not need a large sum to start investing. Many mutual funds in India allow you to begin with as little as Rs. 500, making it accessible for all investors.
Top Mutual Fund Categories For 2025
The top-ranked mutual funds for 2025 each have different qualities to cater to different financial goals, time horizons, etc.
Here are the top mutual fund categories for this year:
1. Equity Mutual Funds
Equity mutual funds are ideal for long-term wealth accumulation or returns. Through these funds, you can get higher returns over a longer period of time, but this might come with higher risk due to market fluctuations over time.
Here are a few popular equity fund options:
- HDFC Flexi Cap Fund
- ICICI Prudential Focused Equity Fund
- Nippon India Large Cap Fund
- ITI Small Cap Fund
2. Debt Mutual Funds
Debt mutual funds are fixed-income securities ideal for people who want stability in their regular income. The returns on these funds are predictable, which makes them suitable for short to medium-term goals.
Here are the top debt mutual funds:
- UTI Corporate Bond Fund
- Motilal Oswal Liquid Fund
- Bandhan Bond Fund
- Bajaj Finserv Liquid Fund
3. Hybrid Mutual Funds
Hybrid mutual funds are balanced investments that combine both equity and debt funds. These funds are perfect for first-time investors as they provide flexibility while balancing risk and return, and thus showing a lot of growth potential.
Here are a few popular hybrid funds:
- Aditya Birla Sun Life Arbitrage Fund
- DSP Regular Savings Fund
- Tata Arbitrage Fund
- Edelweiss Aggressive Hybrid Fund
4. ELSS (Tax-saving) Funds
ELSS or Equity Linked Savings Schemes are the mutual funds that offer dual benefits of tax deduction and a potential for long-term wealth creation. It allows long-term investment with some amount of risk for higher returns.
Here are the top ELSS funds:
- HDFC ELSS Tax Saver Fund
- Motilal Oswal ELSS Tax Saver Fund
- JM ELSS Tax Saver Fund
- ITI ELSS Tax Saver Fund
Best Mutual Funds To Invest In 2025
Here is the list of the best mutual funds to invest in 2025, carefully selected based on different categories:
Top Equity Mutual Funds
Method: This was based on consistent performance over a period of 5 years. Moreover, the AUM or Assets Under Management, expense ratio, and fund manager track record were all taken into consideration for this list.
Name(AUM) | 1Y Return | 5Y Return | Expense Ratio |
| HDFC Focused 30 Fund Direct Growth (Rs 18,559Cr.) | 15.9% | 34.37% | 0.61% |
| ICICI Prudential Infrastructure Direct Growth (Rs 6886.49Cr.) | 6.5% | 41.69% | 1.16% |
| Nippon India Small Cap Fund Direct Growth (Rs 50,826.29Cr.) | 7.4% | 36.73% | 0.73% |
| Motilal Oswal Midcap Fund Direct Growth (Rs 27,780Cr) | 16.8% | 40% | 0.69% |
| Bandhan Small Cap Fund Direct Growth (Rs 10,244Cr) | 6% | 40.19% | 0.38% |
Top Debt Mutual Funds
Method: It is based on credit quality, funds with higher credit ratings, duration or time period of investment to manage interest rate, the yield, and returns of the fund for income generation.
Name | Credit Quality | Duration | Returns (1Y) |
| Aditya Birla Sun Life Medium Term Plan Direct Growth | Government and Corporate(Strong) | Medium | 15.7% |
| ICICI Prudential Gilt Fund Direct Plan Growth | Sovereign(High) | Long | 11.1% |
| Nippon India Credit Risk Fund Direct Growth | Government and Corporate(High) | Medium to High | 10.5% |
| Tata Money Market Fund Direct Growth | High | Short | 8.4% |
| Franklin India Corporate Debt Fund | High | Medium to Long | 11.2% |
Top Hybrid Mutual Funds
Method: The hybrid funds are based on an equity-debt ratio, which balances moderate risk and historical stability, and is consistent with low volatility.
Name | Equity-Debt Ratio | Historical Stability | Returns |
| DSP Aggressive Hybrid Fund | 66.4:33.6 | Lower Risk Profile | Consistent Returns |
| WhiteOak Capital Multi Asset Allocation Fund | 26.71:27.11 | High Risk | Average Returns |
| SBI Equity Hybrid Fund | 72:20 | Low Risk Profile | Consistent Returns |
| ICICI Prudential Multi Asset Fund | 65:25 | High Risk | Above Average Returns |
| Mirae Asset Multi Asset Allocation Fund | 65:25 | High Risk | Average Returns |
Best ELSS Funds (for Tax Saving under 80C)
Method: The ELSS funds, too, are based on the equity-debt ratio and historical stability. Their tax benefits are eligible for deduction under 80C, which means that by investing in this fund, you can claim a deduction from your taxable income.
Name | Equity-Debt Ratio | Historical Stability | Returns |
| DSP ELSS Tax Saver Fund | 93.5:6.5 | High Risk | Above Average |
| HDFC ELSS Tax Saver Fund Direct Plan Growth | 91.96:0.32 | High Risk | Above Average |
| SBI Long Term Equity Fund Direct Growth | 90.97:0 | High Risk | Consistent Returns |
| Motilal Oswal ELSS Tax Saver Fund Direct Plan Growth | 98.17:0.79 | High Risk | Average Returns |
| ITI ELSS Tax Saver Fund Direct Growth | 97.43:0 | High Risk | Average Returns |
Risks In Mutual Fund Investments
While mutual funds can be a great way to invest and grow your money, they often also come with risks. It is important to keep these risks in mind before making investments so that you can make informed decisions and choose safely.
Here are a few of the risk in investing in mutual funds:
1. Market risk (Especially in Equity/Thematic Funds)
Market risk in mutual funds is the fluctuations in the investment markets, which can either cause significant gains or losses. These changes include interest rate fluctuations, inflation, trade wars, global wealth issues, and much more. These market movements can be unpredictable, but to avoid such risks, you can spread your investments across different asset classes.
2. Interest rate risk (In Debt Funds)
In debt funds, it is possible to have interest rate fluctuations. The prices of bonds often rise and fall, thus creating possible gains or heavy losses respectively. The duration of the fund, especially, can impact this interest rate risk. With a longer duration, it becomes more sensitive to changes; thus, adjusting your duration can help you with these risks.
3. Credit/Default Risk
Credit or default risk happens when the issuer of the bond fails to make timely payments of the principal and interest. This can affect the principal amount and cause serious losses. Such risks can happen due to the issuer's financial health, missed deadlines, or market conditions. Therefore, reviewing your funds regularly can help you mitigate such risks.
4. Liquidity Risk
Liquidity risk in mutual funds arises due to the assets that are difficult to sell quickly. This also makes it difficult for investors to withdraw their money during market crises, which also impacts the prices of the assets. It is important to have fund managers monitor your liquid assets closely to avoid such risks.
5. Exit Load and Taxation
An exit load is the fee that is charged due to early withdrawal of investments before their specified period. Due to this exit load, the taxes are also deducted from the capital gains or returns, that does not benefit you in any way. It is important to understand tax implications before investing or withdrawing so that you can have better returns.
Why Diversification Into Fixed-Income Is Crucial
Diversifying your assets into different instruments can help with stability and keep your assets safe. Here are the ways to do so:
1. Volatility of Equity Mutual Funds
Equity mutual funds are linked to the stock market, which makes them extremely volatile. Even with high return potential, it is impossible to predict their performance. It is important to prepare for market fluctuations and rebalance your portfolio with diversification to manage risks.
2. Include Fixed-Income Options
Fixed income investment options like corporate bonds, SDIs, fixed deposits, etc., often provide predictable returns with less chance of market fluctuations. This can be a perfect option for diversification, as allocating small portions to this option can help avoid potential losses.
3. Stable Returns
Fixed income instruments are not only stable but also provide returns in the range of 10-14% per annum. This mutual fund return rate is easily predictable and rarely affected by market fluctuations, which ends up stabilizing your portfolio performance while guaranteeing consistent returns.
4. Portfolio Example
A balanced portfolio with 60% equity fund and 40% fixed income can be a great solution for high returns and limited risk. You can get long-term growth on an equity fund, and the fixed income can be saved for stability, making it a perfect diversification for reducing your portfolio's volatility.
Platform for curated, Secure Fixed-Income Opportunities
Some platforms like Grip Invest offer well-researched, opportunity-yielding, and diversified opportunities to their investors, thus giving them a chance to grow their assets. The platform's diversification helps you avoid risks while securing your investments. Moreover, you will get attractive returns compared to traditional investment options.
Conclusion
With this curated list of the best mutual funds in India for 2025, you’re now equipped to choose the right investment opportunities to grow your income. Your financial goals, risk tolerance, and understanding of the market trends will help you select the mutual fund that aligns best with your needs.
Remember, you don’t have to navigate this journey alone. Grip Invest simplifies the process by offering access to top-rated, high-growth mutual funds and other investment options, ensuring stability and maximum potential returns. Start your journey towards financial success with Grip Invest today.
FAQs On Best Mutual Funds To Invest In 2025
1. What is the best investment for 2025?
The best investment for 2025 completely depends on your conditions and choices. While equity funds can provide you with high returns, they can also be risky; fixed income is not risky but has lower returns. Depending on your risk appetite, you can choose from either of these and more.
2. Which mutual fund is best for the next 5 years?
For the next 5 years, the best mutual funds in India will depend on your income, risk tolerance, and goals. A few of the best mutual funds, according to us, are Motilal Oswal midcap fund, HDFC flexi cap fund, Mirae asset large cap fund, and many more.
3. How do I double my money in 5 years?
To double your money in 5 years, make sure to have an investment plan. Choose your mutual fund option through careful consideration of your income, risk appetite, etc., and invest in high-growth assets like real estate.
4. How to make one crore in 5 years in mutual funds?
To make one crore in 5 years, you will need to invest your assets in high-income generating top performing mutual funds in India. With an annual return of 20% and with the help of midcap, small cap, and flexi cap funds, you can generate that amount of money.
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