Top 5 Mutual Funds for 2025

Ritika

Get ready to boost your investments in 2025 with 5 great mutual funds for different financial goals. Whether you want a comfortable retirement, extra cash, or to take advantage of market opportunities, this guide has something for everyone. Choosing the right mutual fund is key to matching your financial goals and comfort with risk. Let’s explore these top picks to enhance your investment strategy!

Looking for Steady Income? Try Dividend Funds!

If you want regular cash with low risk, dividend funds are a smart choice. Investing in these funds lets you enjoy dividends without the worries of individual stocks, like price drops. This way, you can spread your risk across various stocks while still receiving that reliable dividend income.

"Mutual funds are a blessing for those who don’t have the time or expertise to study markets. The key is patience and staying invested." -Rakesh Jhunjhunwala ("Big Bull" of India)

1. ICICI Prudential Dividend Yield Fund: A Solid Choice for Passive Income

The ICICI Prudential Dividend Yield Fund is a strong choice if you want consistent income. It's safer than investing in individual dividend stocks, which can lose value.

What it does: It focuses on stocks that pay high dividends to provide steady income and lower the risks from price drops in individual stocks.

Performance:

3-year CAGR: 25%
1-year return: 3%, even in a tough market
5-year return: over 29%
Strong track record for more than 5 years

Fund Details:

Low expense ratio
A small exit fee of 1% if you withdraw within a year
Good asset size

Sector Allocation: Well-diversified across banks, construction, power, and pharmaceuticals.
Top Holdings: Includes major companies like ICICI Bank and Maruti Suzuki.

This fund is ideal for anyone seeking regular dividends and stable income without taking on too much risk.

2. SBI Contra Fund: Taking the Road Less Traveled

The SBI Contra Fund seeks value where others see trouble, making it a great choice for investors looking for long-term growth.

Investment Approach: It invests in undervalued stocks with strong growth potential.

Performance:

Long-term: 5-year CAGR at 30.5% and 3-year CAGR at 22.5%.
Short-term fluctuations: -2% over the last 6 months and 1 year, but it focuses on long-term gains.
Consistently ranks as one of the top performers, surpassing competitors.

Fund Info:

With ₹42,220 Crores in assets, it shows strong investor trust.
Low expense ratio of 0.64%.
No lock-in period, just a 1% exit fee if you sell within one year.
Benchmarked against the BSE 500 index.

Diverse Portfolio:

80% in stocks, 14% in cash, and 4% in treasury bills.
Balances large, mid, and small-cap stocks.

Sector Focus: Primarily in Financials, Energy, Technology, and Healthcare.

This fund is ideal for long-term investors who can handle short-term market ups and downs while enjoying a diverse portfolio. Plus, you benefit from SBI’s strong reputation.

3. HDFC Balanced Advantage Fund: Consistency in Unpredictable Markets

If you prefer a cautious investment approach due to heavy responsibilities or uncertain income, the HDFC Balanced Advantage Fund provides stability and balanced growth.

What it offers: A balanced portfolio to help protect your money and reduce volatility.

Performance:

5-year CAGR: 23%
3-year CAGR: 20%
1-year Return: 2%

Despite a recent dip, the fund maintains a balanced portfolio.

Fund Info: Reasonable expense ratio with a 1% fee for cashing out within a year.
Diversified Assets: Investments include equities, corporate debt, government bonds, cash, and REITs in safe sectors like private banks, IT services, and construction engineering.
Top Holdings: HDFC Bank, ICICI Bank, Infosys, and more.

This fund is ideal for conservative investors seeking stability and lower volatility in their portfolios.

4. Parag Parikh Flexi Cap Fund: Growth with Flexibility

The Parag Parikh Flexi Cap Fund is among the best in its category. Flexi-cap funds allow managers to invest in companies of all sizes, enabling them to seize the best opportunities.

Flexibility: Can invest in large, mid, and small-cap companies.
Strong Returns: Similar funds have returned about 24.77% over 3 years and 29.16% over 5 years.
Fund Info: No lock-in period, but a 1% exit fee applies if you withdraw within a year.
Allocation: 45% in large-cap, 13% in mid-cap, and 15% in small-cap.
Top Holdings: Includes major companies like HDFC, ICICI, and SBI.

This fund is ideal for anyone seeking diverse investments managed by professionals focused on growth.

5. Motilal Oswal S&P 500 Fund: A Taste of Global Investment

In our connected world, it’s wise to consider investments outside India. The Motilal Oswal S&P 500 Fund offers a great way to invest globally, especially given the strength of the US market.

What it does: Allows you to invest in the S&P 500 index for global diversification.
Benefits: Protects against negative news that may affect the Indian market.
Performance: Generally mirrors the S&P 500’s performance, providing solid returns with low tracking errors.
Fund Options: Similar funds or ETFs are available from providers like Nippon India.
Fund Info: No lock-in, but a 1% penalty applies if you withdraw within a year.

This fund is perfect for anyone looking to manage risks in India while tapping into US market growth.

Your Investment Journey Awaits!
You've seen a selection of mutual funds, each with a specific purpose. Serious investors take the time to understand their options and make informed choices. We encourage you to explore further, do your own research, and align what you learn with your financial goals. Happy investing!