Best Mutual Funds 2025: Long-Term Picks for High Growth Returns

Investing in mutual funds has always been one of the most reliable ways to build long-term wealth. As 2025 unfolds, investors are shifting towards high-growth equity and SIP-based funds that can outperform traditional instruments and inflation over time.

If your goal is financial freedom, wealth compounding, and disciplined growth, this guide will help you identify some of the best mutual funds in India for 2025.

Why Focus on Long-Term Mutual Funds in 2025?

Long-term investing allows your capital to benefit from the power of compounding and market cycles. Instead of chasing short-term returns, you build sustainable wealth by letting your investments grow steadily.

Key benefits of long-term mutual fund investing:

• Compounding returns over 5–10 years
• Rupee cost averaging through SIPs
• Lower volatility over time
• Professional fund management
• Tax efficiency compared to short-term trading

When you stay invested for 5+ years, even moderate annual returns can create massive growth.

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Top Performing Mutual Funds 2025 (Long-Term Growth Focus)

Below are five major categories of mutual funds ideal for long-term wealth creation. Each includes leading fund examples (from the top 10–15 picks) with their focus, suitability, and performance snapshot.

1. Flexi Cap Mutual Funds

Why invest:
Flexi Cap Funds can invest across large, mid, and small-cap segments-providing diversification, flexibility, and balanced risk.

Top Features:

• Balanced risk-return ratio
• Actively managed portfolios
• Suitable for 5–7 year horizons
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Top Fund Picks:

• Parag Parikh Flexi Cap Fund – Dynamic allocation across caps; consistent performance.
• HDFC Flexi Cap Fund – Broad market exposure with experienced management.
• Motilal Oswal NASDAQ 100 Fund of Fund – Adds global diversification by investing in top US tech giants like Apple, Microsoft, and Amazon. Perfect for investors seeking dollar-hedged growth.
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Performance Snapshot:

• 5-Year CAGR: 15–18%
• Expense Ratio: ~0.8% (Direct Plan)
• SIP Start: ₹500

Ideal for: Balanced investors seeking long-term compounding.

2. Large Cap Equity Funds

Why invest:
Large-cap funds invest in well-established blue-chip companies that offer stability, steady compounding, and strong downside protection.

Top Features:

• Consistent returns
• Lower volatility
• Strong fundamentals
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Top Fund Picks:

• ICICI Prudential Bluechip Fund – Focus on top-tier companies; stable performance.
• HDFC Balanced Advantage Fund (Hybrid) – Blends equity and debt for moderate risk profiles.
• Motilal Oswal S&P 500 Index Fund (optional addition for US diversification) – Offers a passive route to global blue-chip exposure.
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Expected Returns: 12–15% annually
Ideal Tenure: 7–10 years

Ideal for: Conservative investors aiming for steady growth.

3. Mid & Small Cap Funds

Why invest:
For investors comfortable with higher volatility, mid-cap and small-cap funds can deliver superior long-term growth.

Top Features:

• High alpha generation potential
• Exposure to emerging sectors
• Suitable for 8–10+ years
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Top Fund Picks (High-Growth Focus):

• Motilal Oswal Large & Midcap Fund – Captures both stability and growth across caps.
• Motilal Oswal Small Cap Fund – Outstanding performance among new entrants; focuses on emerging Indian businesses with high alpha generation potential.
• HDFC Mid-Cap Opportunities Fund – One of the most reliable mid-cap performers.
• Bandhan Small Cap Fund – Aggressive small-cap strategy; high reward potential.
• Quant Small Cap Fund – Consistently among the top high-growth small-cap funds.
• Nippon India Small Cap Fund – Diversified small-cap exposure for long-term investors.
• Invesco India Small Cap Fund – Strong 5-year track record with consistent alpha.
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Expected Returns: 18–22% CAGR (with higher volatility)
Ideal for: Investors seeking aggressive long-term capital appreciation.

4. Sectoral & Thematic Funds

Why invest:
These funds focus on fast-growing sectors and can outperform broader markets during sectoral upcycles. Ideal for portfolio diversification.

Top Features:

• High growth potential in niche sectors
• Best used as 10–20% of portfolio
• 
  

Top Fund Picks:

• ICICI Prudential Infrastructure Fund – Rides on India’s massive infrastructure expansion.
• Franklin Build India Fund – Focused on construction and capital goods sectors.
• SBI Healthcare Opportunities Fund – Long-term play on India’s healthcare sector.
• HDFC Infrastructure Fund – Spreads exposure across leading infra companies.
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Expected Returns: 16–20% (sector-dependent)
Risk Level: High
Ideal Tenure: 7–10 years

Best for: Investors who believe in specific growth themes like infra or healthcare.

5. ELSS & SIP-Based Investment Plans

Why invest:
SIP-based and ELSS mutual funds are ideal for salaried individuals seeking tax savings and disciplined investing.

Top Features:

• Tax deduction under Section 80C (up to ₹1.5 lakh)
• Lock-in period: 3 years
• SIP flexibility starting ₹500
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Popular Choices:

• Parag Parikh Flexi Cap (also qualifies as SIP pick)
• Motilal Oswal NASDAQ 100 FOF (SIP + International diversification)
• HDFC Balanced Advantage Fund – For consistent long-term SIP returns
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Pro Tip:
Even a ₹2,000 monthly SIP for 10 years can grow to ₹5–6 lakhs at a 12–13% return rate.

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Building a Long-Term Portfolio in 2025

1. Diversify Smartly: Combine 2–3 flexi or large-cap funds with 1–2 mid/small-caps.
2. Automate via SIPs: Invest monthly and increase amount yearly (SIP step-up).
3. Stay Invested: Avoid reacting to short-term market corrections.
4. Rebalance Annually: Review underperformers and maintain your target asset allocation.
5. Think in Decades: Wealth compounds best when time and discipline work together.

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How to Choose the Right Mutual Fund for You

Before investing, consider the following:

Factor	What It Means	Why It Matters
Investment Horizon	How long you plan to stay invested	Determines fund type & volatility
Risk Appetite	Comfort with market ups and downs	Helps choose between large/mid/small caps
Expense Ratio	Fund management cost	Impacts net returns
AUM (Assets Under Management)	Total value managed by fund	Reflects fund popularity and trust
Fund Manager Track Record	Experience & performance history	Crucial for consistent returns

 

Top 17 Mutual Funds for 2025 (Long-Term Picks)

Here is a curated list of funds you may consider in your portfolio. I’ve grouped them by category with highlights:

	Fund Name	Category	Key Strengths	Ideal For / Risk
1	Motilal Oswal Large & Midcap Fund	Large & Mid Cap	Strong 3- & 5-year CAGR (~30%)	Moderate–High Risk
2	Motilal Oswal Small Cap Fund	Small Cap	Excellent 5-year SIP returns, emerging business exposure	High Risk
3	Motilal Oswal NASDAQ 100 Fund of Fund	International / Thematic	US Tech diversification, USD hedge	Balanced Growth
4	ICICI Prudential Infrastructure Fund	Thematic / Infra	High 5Y CAGR (~38%)	Sector Investors
5	Franklin Build India Fund	Thematic / Infra	Industrial & capital goods focus	Sector Diversification
6	HDFC Mid-Cap Opportunities Fund	Mid Cap	Reliable long-term mid-cap performer	Moderate–High Risk
7	Bandhan Small Cap Fund	Small Cap	Strong 3-year CAGR (~25%)	Aggressive Growth
8	Nippon India Small Cap Fund	Small Cap	Consistent high returns, broad base	Long-Term Growth
9	Quant Small Cap Fund	Small Cap	High alpha, tactical allocation	High Volatility
10	Invesco India Small Cap Fund	Small Cap	Strong management, steady growth	Growth Focus
11	Parag Parikh Flexi Cap Fund	Flexi Cap	Balanced, globally diversified	Long-Term SIP
12	HDFC Flexi Cap Fund	Flexi Cap	Wide market coverage	Core Portfolio
13	ICICI Bluechip Fund	Large Cap	Stable returns, low volatility	Core Holding
14	SBI Healthcare Opportunities Fund	Thematic	Defensive with growth	Sector Diversification
15	HDFC Infrastructure Fund	Thematic / Infra	Cyclical but rewarding	Sector Investors
16	Axis Small Cap Fund	Small Cap	Reliable SIP track record	Long-Term SIPs
17	HDFC Balanced Advantage Fund	Hybrid / Balanced	Equity + debt stability	Conservative Investors

Top 15 Mutual Funds 2025 Returns Chart

What Makes Each Fund Stand Out

1. Motilal Oswal Large & Midcap Fund
Launched on 17 October 2019 (Direct / Growth), this fund invests across large, mid, and small cap stocks, offering flexibility and diversification. It aims for medium-to-long term capital appreciation through a balanced portfolio across caps. Over recent years, it has delivered strong returns - for example, 3-year returns in the range of ~30% (Direct Growth). Its key strengths are dynamic allocation and ability to ride both stability and growth phases. Expense ratios and exit loads should be checked (e.g. exit load ~1%) before investing.

2. ICICI Prudential Infrastructure Fund
This fund has been around for over a decade (since 2005 as a scheme class) - its “Since Inception” returns are ~15.92% per annum for total capital growth. It invests primarily in infrastructure, power, construction, and allied sectors, making it a strong thematic bet. Recent 5-year returns are very impressive (e.g. ~36–38% CAGR). The expense ratio is around 1.14% for the fund, and it carries high sectoral risk. Best suited for investors who believe in India’s long-term infrastructure growth.

3. Franklin Build India Fund
This sector/thematic fund is focused on construction, capital goods, and industrial stocks, aiming to capture the growth in India’s infrastructure development. It is more volatile compared to diversified equity funds but offers upside in cyclical phases. While I didn’t find a precise launch year in the scanned sources, its niche focus demands a strong conviction in these sectors. Investors should monitor concentration risk and ensure this fund complements a broader diversified portfolio.

4. Invesco India Smallcap Fund
A pure small-cap equity fund, this scheme invests in emerging, fast-growing companies with strong growth potential. It’s designed for investors with high risk tolerance and a long horizon (8–10 years+). Over recent years, small-cap funds like this have delivered high returns (often in excess of 25–30% CAGR in bullish phases). However, the volatility is large - drawdowns can be steep during downturns. Key metrics (expense, turnover, AUM) should be verified in the latest factsheet before allocation.

5. HDFC Mid Cap Fund
A well-established mid-cap fund, it boasts consistent performance and risk-adjusted returns. According to ET Money, since its launch it has delivered ~21.09% annualized returns over its lifetime. Its ability to control losses in market downturns is also above average for its category. As a mid-cap holding, it provides growth potential while keeping some stability - ideal as a core or satellite fund in a 7–10 year portfolio.

6. SBI Healthcare Opportunities Fund
This thematic fund invests primarily in the healthcare, pharma, and biotech sectors, offering structural diversification and resilience. It can act as a defensive growth play given the long-term demand in healthcare. Because it is sector-specific, there is concentration risk; returns depend heavily on regulatory, innovation, and sector cycles. Investors should check the fund’s sector exposure percentages, expense ratio, and fund manager track record before allocation.

7. Bandhan Small Cap Fund
Known for its aggressive approach, this fund invests in high growth companies with high potential upside. Recently, Bandhan Small Cap has been highlighted among equity funds that delivered >25% CAGR over 3 years. Ideal for investors who accept high volatility in exchange for superior growth over long periods. Be aware: the downside in corrections can be steep. Validate its expense ratio, turnover, and consistency over multiple cycles.

8. HDFC Infrastructure Fund
Launched in 2008 (as per Kotak Securities compare), this thematic fund spans infrastructure, energy, construction, and related sectors. Its 5-year returns are strong - e.g. ~34.74% CAGR (Growth plan) - and it has reasonable SIP performance (~26.14%) over 5-year horizon. Use it as a thematic bet in your portfolio, but understand its cyclicality and concentration risk.

9. Nippon India Small Cap Fund
This fund invests broadly across India’s small-cap universe, aiming for high long-term growth. It is often recommended as a small-cap alternative alongside others like Bandhan or Invesco. While I did not locate its exact inception or return metrics in the scanned data, it is widely regarded among high-growth small-cap funds for diversification. Check its fund factsheet for expense ratio, top holdings, and risk profile.

10. ICICI Prudential Bluechip Fund
As a large-cap / bluechip equity fund, it invests in stable, high-market-cap companies with reliable earnings. This fund is less volatile and acts as a core holding for many portfolios. It aims to deliver consistent growth with lower downside. For risk-averse investors, this fund is a solid anchor. (Specific inception / returns data would need to be confirmed from fund documents.)

11. Parag Parikh Flexi Cap Fund
This flexi-cap fund is known for its value-investing approach and ability to shift allocations across large, mid, and small caps dynamically. It also includes global equities in small measure for diversification. Because of this flexibility, it adapts to changing market phases better than rigid cap funds. For risk, ensure you review its expense ratio, global exposure, and volatility before investing.

12. HDFC Flexi Cap Fund
One of the long-standing flexi-cap funds, it has shown excellent long-term performance. It offers broad diversified exposure across market caps and adjusts allocations as per market conditions. According to media trackers, a long-term SIP in this fund has grown impressively over decades. For stability and growth, it’s a strong pick - but always check current metrics (expense, returns, AUM) before investing.

13. Quant Small Cap Fund
This fund leverages data-driven strategies to pick high-potential small-cap companies. It aims for aggressive growth and often features in “high return potential” lists. Volatility is high, but over long investment horizons, it can deliver substantial returns. Confirm its track record across multiple market cycles, as small-cap funds can have periods of underperformance.

14. HDFC Mid-Cap Opportunities Fund
A well-known mid-cap fund with reputation for consistency. It invests in companies with scalable business models in India’s mid-market space. This fund balances growth with relative stability compared to pure small-cap options. To decide its fit in your portfolio, check its historical returns vs peers, expense ratio, and downside control in volatile phases.

15. HDFC Balanced Advantage / Hybrid Fund
This hybrid / balanced advantage fund dynamically shifts between equity and debt allocations to smooth returns. It’s suitable for moderate-risk investors who want exposure to equity but want buffers against market swings. It’s less volatile than pure equity funds, yet offers good long-term growth. Check its historical equity/debt mix, past returns, and its behavior in downturns to ensure consistency.

16. Motilal Oswal Small Cap Fund

Launched in 2024 (Direct / Growth), the Motilal Oswal Small Cap Fund focuses on identifying high-potential emerging businesses with scalable growth prospects. It seeks to capture opportunities in under-researched small-cap segments that can evolve into future mid-caps or large-caps. With a disciplined bottom-up stock-picking strategy and strong research backing, this fund has delivered outstanding performance within a short span -with 1-year SIP returns already exceeding peers in its category. Investors with a long-term horizon (8–10 years) and higher risk tolerance can benefit from its aggressive growth orientation.

17. Motilal Oswal NASDAQ 100 Fund of Fund (FoF)

Introduced in 2011, the Motilal Oswal NASDAQ 100 FoF provides Indian investors convenient access to the world’s top technology and innovation-driven companies listed on the NASDAQ 100 index -including Apple, Microsoft, Amazon, and Alphabet. It offers global diversification, dollar-denominated growth exposure, and has consistently outperformed traditional Indian equity benchmarks during strong U.S. market cycles. With SIPs starting as low as ₹500, it suits investors seeking long-term wealth creation through international exposure while balancing their domestic equity portfolios.

Best Strategy for Long-Term Growth in 2025

1. Diversify: Combine large-cap, flexi-cap, and ELSS funds.
2. Automate: Start SIPs and stick to them.
3. Review Annually: Replace underperforming funds.
4. Stay Invested: Don’t panic during corrections.
5. Think in Decades, Not Days.
6. 
   

Mistakes to Avoid

• Investing without goal clarity
• Ignoring expense ratios
• Exiting early during volatility
• Chasing short-term returns
• Neglecting portfolio rebalancing
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Final Thoughts

2025 is an excellent year for long-term investors - India’s economic fundamentals, digital growth, and equity participation are at an all-time high.
By choosing the right mutual funds for long-term growth, and staying disciplined with SIP investments, you can steadily build wealth and achieve financial independence.

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