Top 5 Mutual Funds with Highest Returns in 2025: Key Facts for Indian Investors
Top 5 Mutual Funds with Highest Returns in 2025
In 2025, mutual funds remain a popular choice for Indian investors seeking wealth growth. According to recent data, some funds have delivered impressive returns despite market challenges.
The top five mutual funds with the highest returns this year include DSP World Gold Fund of Fund (FoF), Nippon India Small Cap Fund, Invesco India Midcap Fund, Quant Mid Cap Fund, and Motilal Oswal Midcap Fund.
For instance, DSP World Gold FoF has achieved a remarkable 74% return in the last year, driven by rising global gold prices. Similarly, Nippon India Small Cap Fund has posted a 21.3% CAGR over 10 years. These funds have caught attention due to their strong performance, but investors need to understand key details before investing.
Why These Funds Are Leading in 2025
The DSP World Gold FoF, an international fund, has benefited from a 25% surge in gold prices over five months in 2025, averaging 24% returns for gold funds.
Nippon India Small Cap Fund, with an AUM of ₹58,028.6 crore as of April 2025, focuses on small-cap companies with high growth potential, delivering consistent double-digit returns. Invesco India Midcap Fund, with ₹66 billion AUM, has a diversified portfolio of 46 stocks, yielding 23.2% SIP returns over 10 years.
Quant Mid Cap Fund, under Quant Group since 2018, holds 26 stocks, with top holdings like Coforge (10.1%) and Persistent Systems (9.7%). Motilal Oswal Midcap Fund, recognized for its minimal expense ratio, maintains a focused portfolio consisting of 20-30 stocks, delivering 23.1% SIP returns over the past ten years.
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These funds shine due to their focus on high-growth sectors like gold, small-cap, and mid-cap stocks.
Market Trends Driving Mutual Fund Success
In 2025, Indian markets have faced volatility due to global trade tensions, geopolitical issues like the India-Pakistan conflict, and weak corporate earnings. The BSE Sensex has risen modestly by 4.4% as of May 27, 2025.
Despite this, certain sectors have thrived. Defence mutual funds, for example, have averaged over 30% returns, boosted by ₹54,000 crore in government defence orders. Banking, Financial Services, and Insurance (BFSI) funds have also performed strongly.
International funds like DSP World Gold FoF have gained from a weak rupee and booming global sectors like technology and green energy. These trends highlight why diversified and sectoral funds are delivering high returns this year.
Key Facts About Top Mutual Funds
Each fund has unique features. DSP World Gold FoF invests in gold mining companies, offering diversification beyond Indian markets. Nippon India Small Cap Fund’s NAV stood at ₹165.84 as of May 30, 2025, with a focus on emerging companies. Invesco India Midcap Fund’s portfolio includes 66% midcaps, 19% smallcaps, and 13% largecaps, with top holdings like BSE (6.1%) and L&T Finance (4.3%).
Quant Mid Cap Fund’s concentrated portfolio includes Kalyan Jewellers (8.0%). Motilal Oswal Midcap Fund, with 68% midcap exposure, holds Reliance Industries (9.9%) and Aurobindo Pharma (7.6%).
These funds are rated highly by Value Research for consistent returns and low expense ratios, making them attractive for long-term investors.
Risks and Considerations for Investors
Mutual funds carry risks, especially in volatile markets. Small-cap and mid-cap funds like Nippon India and Invesco can be unpredictable due to their focus on smaller companies. International funds face currency fluctuation risks, as seen with DSP World Gold FoF.
Past performance, while impressive, does not guarantee future results. For example, a ₹5,000 monthly SIP in a small-cap fund with a 15% CAGR over 10 years could grow to ₹13.9 lakh, but market dips can affect returns. Investors should assess their risk tolerance and investment goals before choosing funds.
Recent Updates in Mutual Fund Investments
In May 2025, mutual funds reshuffled portfolios, favoring large-cap and mid-cap stocks like ITC, Swiggy, and Bajaj Auto. Kotak Mutual Fund added stakes in PSU players like Engineers India. The launch of the Gauteng MERO Report on June 23, 2025, emphasizes data-driven investment planning, a trend relevant for Indian investors. Systematic Investment Plans (SIPs) remain a disciplined way to invest, reducing market timing risks.
A ₹10,000 monthly SIP in HDFC Mutual Fund’s top schemes has grown to over ₹36 lakh in 10 years, showcasing the power of compounding.
How to Start Investing in Mutual Funds
To invest in these funds, Indians can use platforms like Groww, Zerodha, or directly through fund houses like SBI, HDFC, or Motilal Oswal.
Checking AUM, NAV, expense ratios, and past returns is crucial. For instance, SBI Technology Opportunities Fund has turned a ₹10,000 monthly SIP into ₹36.14 lakh in 10 years. Consulting a SEBI-registered advisor ensures informed decisions.
Disclaimer: This article is for informational purposes only and not financial advice. Investments are subject to market risks. Please consult a SEBI-registered advisor before investing.
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