Top 5 Mutual Funds to Invest in 2025
In today’s fast-moving financial world, building wealth through investments has become essential. For beginners stepping into the world of investments, mutual funds present a simple yet effective option to grow their money without the need for deep market knowledge.
Why Mutual Funds Are Ideal for Beginners?
Mutual funds offer a perfect combination of professional management, diversification, and growth opportunities. They are designed to minimize risk while providing steady returns over time. Especially for beginners, choosing the right mutual fund can offer not just returns but also added benefits like tax savings, wealth creation, and financial discipline.
What Makes a Mutual Fund Beginner-Friendly?
When selecting the best mutual fund for beginners, certain key factors should be considered:
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Stable Returns: Consistent performance over the years.
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Diversification: Spreading investments across various sectors to reduce risk.
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Tax Benefits: Some mutual funds offer tax-saving advantages under specific schemes.
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Low Expense Ratio: Lesser management fees help in maximizing returns.
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Professional Management: Expert fund managers handle the investment decisions.
(Data as of February 5, 2025)
| Fund Name | Type | 3-year Annualised Returns |
| SBI Long-Term Equity Fund | ELSS | 23.51% |
| Motilal Oswal ELSS Tax Saver Fund | ELSS | 22.18% |
| HDFC ELSS Tax Saver Fund | ELSS | 21.54% |
| ICICI Prudential LT Wealth Enhancement Fund | ELSS | 19.77% |
| Sundaram LT Tax Adv Fund-Sr IV | ELSS | 19.44% |
| JM Aggressive Hybrid Fund | Aggressive Hybrid | 21.40% |
| HDFC Balanced Advantage Fund | Balanced Advantage | 20.26% |
| ICICI Prudential Multi-Asset Fund | Multi-Asset | 19.14% |
| Quant Multi-Asset Fund | Multi-Asset | 18.84% |
| UTI Multi-Asset Allocation Fund | Multi-Asset | 18.45% |
Overview of the Top 5 Mutual Funds to Invest in 2025 for Beginners
For new investors stepping into the mutual fund world, selecting the right fund is crucial. Here is a carefully selected list of beginner-friendly mutual funds for 2025, based on their consistent performance, risk profile, and fund management quality.
Equity Linked Savings Schemes (ELSS) – Best for Tax Saving & Growth
SBI Long-Term Equity Fund
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Returns: 23.51% (3-Year Annualized)
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Risk Level: Very High
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Minimum SIP: ₹500
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AUM: ₹27,791 crore
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Portfolio Allocation: 90% Equity, 0.1% Debt, 9.6% Cash
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Expense Ratio: 0.95%
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Launched: May 7, 2007
SBI Long-Term Equity Fund is ideal for beginners who wish to combine high growth potential with tax benefits under Section 80C.
Motilal Oswal ELSS Tax Saver Fund
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Returns: 22.18% (3-Year Annualized)
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Risk Level: Very High
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Minimum SIP: ₹500
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AUM: ₹4,414 crore
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Portfolio Allocation: 98.9% Equity, 1.1% Cash
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Expense Ratio: 0.69%
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Launched: January 21, 2015
This fund is known for its aggressive equity exposure, making it suitable for investors targeting high long-term returns.
HDFC ELSS Tax Saver Fund
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Returns: 21.54% (3-Year Annualized)
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Risk Level: Very High
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Minimum SIP: ₹500
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AUM: ₹4,414 crore
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Portfolio Allocation: 98.9% Equity, 1.1% Cash
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Expense Ratio: 0.69%
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Launched: March 31, 1996
A veteran fund with a strong track record, providing consistent performance for tax-saving investors.
ICICI Prudential Long-Term Wealth Enhancement Fund
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Returns: 19.77% (3-Year Annualized)
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Risk Level: Very High
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Minimum SIP: Not Available
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AUM: ₹41.30 crore
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Portfolio Allocation: 98.7% Equity, 1.3% Cash
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Expense Ratio: 0.99%
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Launched: March 22, 2018
A relatively new ELSS fund, offering competitive returns while aggressively investing in equities.
Sundaram Long-Term Tax Advantage Fund
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Returns: 19.44% (3-Year Annualized)
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Risk Level: Very High
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Minimum SIP: Not Available
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AUM: ₹22.77 crore
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Portfolio Allocation: 95.7% Equity, 4.3% Cash
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Expense Ratio: 1.67%
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Launched: March 22, 2018
A compact ELSS fund suitable for investors seeking long-term tax-saving investment opportunities.
Hybrid Funds – Balanced Options for Beginners
JM Aggressive Hybrid Fund
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Returns: 21.40% (3-Year Annualized)
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Risk Level: Very High
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Minimum SIP: ₹100
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AUM: ₹762.93 crore
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Portfolio Allocation: 74.6% Equity, 19.4% Debt, 6.1% Cash
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Expense Ratio: 0.68%
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Launched: April 1, 1995
Perfect for beginners who want equity exposure with some debt stability to balance market volatility.
HDFC Balanced Advantage Fund
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Returns: 20.26% (3-Year Annualized)
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Risk Level: Very High
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Minimum SIP: ₹100
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AUM: ₹95,521 crore
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Portfolio Allocation: 53.7% Equity, 30.1% Debt, 14.8% Cash
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Expense Ratio: 0.78%
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Launched: September 11, 2000
A highly popular balanced fund, ideal for conservative beginners who want exposure to both equity and debt.
ICICI Prudential Multi-Asset Fund
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Returns: 19.14% (3-Year Annualized)
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Risk Level: High
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Minimum SIP: ₹100
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AUM: ₹51,027 crore
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Portfolio Allocation: 48.2% Equity, 16.8% Debt, 22% Cash
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Expense Ratio: 0.70%
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Launched: October 31, 2002
This multi-asset approach helps beginners diversify across multiple asset classes while limiting risk.
Quant Multi-Asset Fund
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Returns: 18.84% (3-Year Annualized)
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Risk Level: High
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Minimum SIP: ₹1,000
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AUM: ₹3,201 crore
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Portfolio Allocation: 54.2% Equity, 10.5% Debt, 22% Cash
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Expense Ratio: 0.74%
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Launched: March 21, 2001
This fund combines aggressive growth with some debt protection, making it a balanced choice for ambitious beginners.
UTI Multi-Asset Allocation Fund
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Returns: 18.44% (3-Year Annualized)
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Risk Level: Very High
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Minimum SIP: ₹500
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AUM: ₹4,962 crore
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Portfolio Allocation: 55.1% Equity, 20% Debt, 14.4% Cash
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Expense Ratio: 0.42%
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Launched: November 19, 2008
An excellent choice for beginners who prefer balanced allocation with an emphasis on steady growth and lower expense ratio.
Things to Know Before Investing in Mutual Funds for Beginners
Although investing in mutual funds has become easy, it is important to know certain aspects about them before making the investment.
Know Your Investment Goals
Regardless of the investment vehicle, it is crucial for investors to know their investment goals. They should have a clear understanding of what they would like to achieve from the investment and the timeframe within which to achieve them. This knowledge is crucial in the decision-making process of choosing the most suited mutual fund scheme(s).
They should have a clear understanding of their investment goals and the timeframe within which to achieve them. This knowledge is crucial in the decision-making process of selecting the most appropriate mutual fund scheme.
Know Your Risk Appetite
In addition to their investment goals, investors should be aware of their risk appetite. Mutual fund investment plans for beginners can carry moderate to high risk. They should invest in a scheme only after considering the risks that they can take on and the returns they are targeting.
Know the Importance of Staying Consistent
Short-term market volatility may shake the confidence of newer investors. However, it is important to know that staying invested for the long term is typically more beneficial. Especially for those investing through a systematic investment plan (SIP), staying disciplined and consistent can be rewarding.
Know the Pros and Cons of Diversification
Diversification refers to allocating one’s funds to different sectors, mutual fund schemes, or asset classes. Diversification can help mitigate risks and provide more stable returns. However, over-diversification can impact the overall performance of the portfolio.
Know the Tax Implications
Before making an investment decision in a mutual fund for beginners, know the tax implications of investing. An ELSS scheme offers tax benefits under Section 80C of the Income Tax Act. Other schemes attract capital gains tax and do not offer similar tax advantages.
Know Your Scheme
Before investing in a mutual fund scheme, investors should evaluate and compare the fund with other funds. Study the fund’s past performance, fund managers, and investment strategy. Consider the lock-in period, fees, and associated costs.
Conclusion
Investing through a mutual fund can be the right step for those just starting out on their investment journey. Although investing can be a rewarding activity, it is important to be aware of the risks and costs associated with investing. Staying consistent and having a long-term investment approach can be fruitful for beginner investors.
Disclaimer: This blog is solely for educational purposes. The securities/investments quoted here are not recommendatory.
