Best Mutual Funds for Long-Term SIPs in 2025: Top Picks for Wealth Creation
Investing in mutual funds for the long term is one of the best strategies to create wealth and achieve financial goals. A well-diversified portfolio of funds, aligned with your risk appetite and investment horizon, can help you achieve compounding growth over time. Below is a curated list of best mutual funds for long-term SIPs in 2025.
This blog is tailored for investors with a long-term investment horizon of 10 to 20 years who are seeking high-risk, high-return opportunities. These investors are willing to withstand short-term market volatility in exchange for the potential of significant wealth creation over the long run. They have a higher risk tolerance and a keen focus on equity-heavy portfolios, including mid-cap, small-cap, and sectoral funds. The goal is to capitalize on the compounding effect and market growth over time, making it ideal for those looking to build a substantial corpus for future goals such as retirement, children’s education, or financial independence.
Category: Flexi Cap (Active Fund)
Assets Under Management (AUM): ₹87,000+ Crore
Expense Ratio: 0.63%
Inception Year: 2013
5-Year CAGR: 25.00%
No-1 in the list is Parag Parikh Flexi Cap Fund. This fund offers exposure to domestic and international equities, providing diversification across geographies. It invests in companies of all sizes, adapting to market trends.
- Advantages:
- Strong track record of consistent performance.
- Diversification across sectors and geographies.
- Risks:
- Market volatility due to global exposure.
- Currency risk in international holdings.
Category: Mid Cap (Active Fund)
Assets Under Management (AUM): ₹26,000+ Crore
Expense Ratio: 0.65%
Inception Year: 2014
5-Year CAGR: 30.00%
No-2 in the list is Motilal Oswal Midcap Fund. This actively managed fund focuses on mid-sized companies with growth potential. It’s ideal for investors seeking higher returns over the long term.
- Advantages:
- Strong focus on growth-oriented midcap companies.
- Potential for high returns.
- Risks:
- Higher volatility compared to large-cap funds.
- Midcap stocks may have liquidity issues during downturns.
Category: Small Cap (Active Fund)
Assets Under Management (AUM): ₹26,000+ Crore
Expense Ratio: 0.65%
Inception Year: 2013
5-Year CAGR: 45.00%
No-3 in the list is Quant Small Cap Fund, This fund targets high-growth small-cap companies, ideal for investors with a higher risk tolerance and a longer investment horizon.
- Advantages:
- Opportunity to invest in emerging companies.
- Potential for significant capital appreciation.
- Risks:
- Higher risk due to market volatility and liquidity concerns.
- Suitable only for seasoned investors with patience and high-risk tolerance.
Category: Micro Cap (Passive Fund)
Assets Under Management (AUM): ₹1900+ Crore
Expense Ratio: 0.43%
Inception Year: 2023
1-Year CAGR: 40.00%
No-4 in the list is Motilal Oswal Nifty Microcap 250 Index Fund. This fund provides exposure to microcap stocks, making it a high-risk, high-reward option for long-term wealth creation.
- Advantages:
- Access to early-stage companies with growth potential.
- Ideal for aggressive investors seeking diversification.
- Risks:
- Extremely high volatility and liquidity risks.
- Requires a long investment horizon of at least 10+ years.
Category: International (Passive Fund of Fund)
Assets Under Management (AUM): ₹6500+ Crore
Expense Ratio: 0.24%
Inception Year: 2018
5-Year CAGR: 26.00%
- No-5 in the list is the Motilal Oswal Nasdaq 100 Fund of Fund. This fund allows Indian investors to gain exposure to the top 100 non-financial companies listed on the Nasdaq stock exchange.
- Advantages
- Global Diversification: Provides access to the U.S. market and top-performing global tech giants.
- Currency Advantage: Returns may benefit from the rupee depreciating against the dollar.
- Risks
- Currency Risk: Returns are affected by fluctuations in the rupee-dollar exchange rate.
- Market Volatility: As a global fund, it is subject to geopolitical and economic factors in the U.S.
Category: Large Cap Smart Beta (Passive Fund)
Assets Under Management (AUM): ₹600+ Crore
Expense Ratio: 0.25%
Inception Year: 2024
1-Year CAGR: Not Available
No-6 in the list is Nippon India Nifty 500 Momentum 50 Index Fund. This fund tracks the Nifty 500 Momentum 50 Index, focusing on stocks with strong momentum.
- Advantages:
- Passive fund with low expense ratios.
- Ideal for trend-following investors.
- Risks:
- Performance highly reliant on momentum strategies.
- May underperform in sideways or bearish markets.
Category: Mid Cap Smart Beta (Passive Fund)
Assets Under Management (AUM): ₹700+ Crore
Expense Ratio: 0.43%
Inception Year: 2022
2-Year CAGR: 35.00%
No-7 in the list is Tata Nifty Midcap 150 Momentum 50 Index Fund. Invests in midcap stocks with strong momentum, combining growth potential and trend-based strategies.
- Advantages:
- Diversified exposure to midcap momentum stocks.
- Low-cost passive fund.
- Risks:
- High volatility during market downturns.
- Limited flexibility due to index-tracking nature.
Category: Large Cap Smart Beta (Passive Fund)
Assets Under Management (AUM): ₹150+ Crore
Expense Ratio: 0.40%
Inception Year: 2024
1-Year CAGR: Not Available
No-8 in the list is Edelweiss Nifty 500 Multicap Momentum Quality 50 Index Fund. This fund combines momentum and quality factors to select stocks, ensuring a mix of growth and stability.
- Advantages:
- Strategic allocation to high-quality, high-momentum stocks.
- Diversification across multiple market caps.
- Risks:
- May underperform in volatile markets.
- Tracking error due to index replication.
Category: Small Cap Smart Beta (Passive Fund)
Assets Under Management (AUM): ₹200+ Crore
Expense Ratio: 0.36%
Inception Year: 2024
1-Year CAGR: Not Available
No-9 in the list is Mirae Asset Nifty Smallcap 250 Momentum Quality 100 ETF FOF. This Fund Invests in funds tracking small-cap stocks with momentum and quality metrics.
- Advantages:
- Access to a basket of well-researched small-cap stocks.
- Ideal for investors seeking systematic exposure to small-cap momentum.
- Risks:
- Higher expense ratio due to FoF structure.
- Volatility and liquidity risks in small-cap investments.
Category: Large Cap Smart Beta (Passive Fund)
Assets Under Management (AUM): ₹500+ Crore
Expense Ratio: 0.57%
Inception Year: 2023
1-Year CAGR: 15.00%
No-10 in the list is UTI Nifty 500 Value 50 Index Fund. This Fund Tracks the Nifty 500 Value 50 Index, focusing on undervalued companies with strong fundamentals.
- Advantages:
- Focus on value investing, suitable for conservative investors.
- Low-cost passive option.
- Risks:
- May underperform during bull markets favoring growth stocks.
- Limited flexibility due to index-based strategy.
Why Choose Mutual Funds for Long-Term Investing?
- Power of Compounding: Long-term SIPs allow your investments to grow exponentially over time.
- Rupee Cost Averaging: SIPs reduce the impact of market volatility by averaging out the purchase cost.
- Diversification: Mutual funds spread your investment across multiple stocks and sectors, reducing risk.
Risks to Consider - Market fluctuations can impact returns, especially in equity funds.
- Sectoral/thematic funds carry higher concentration risk.
- Small- and micro-cap funds are more volatile and require patience.
Conclusion
Investing in mutual funds for the long term can help achieve financial independence and meet future goals. However, it’s crucial to align investments with your risk tolerance, financial goals, and time horizon. A mix of diversified, sectoral, and index funds can provide the right balance for long-term wealth creation.Disclaimer
This article is for educational purposes only and does not constitute financial advice. We are not a SEBI registered financial advisor. Please consult a SEBI-registered financial advisor and conduct your research before investing.
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