Choosing the right mutual fund as a beginner can feel overwhelming. Still, selecting funds with a proven track record, a suitable risk level, and a clear investment strategy can simplify your decision. Here are some of the best mutual funds for beginners in India in 2025, each catering to different risk appetites and goals:
Type: Large Cap Equity Fund
Axis Bluechip Fund invests mainly in large-cap companies like Infosys, Reliance Industries, and HDFC Bank — some of India's most stable and well-established firms. Large-cap funds are less volatile than mid or small-cap funds, making them suitable for beginners who want steady growth with moderate risk. This fund has consistently delivered returns of around 12-15% annually over the last five years. It's ideal for investors seeking wealth creation over five years or more, without the high ups and downs associated with smaller companies.
Type: Flexi Cap (Equity with global exposure)
This fund uniquely invests across market capitalizations, including international stocks, to provide diversified exposure beyond India. It focuses on value investing by picking undervalued companies with strong fundamentals, helping reduce downside risks during market volatility. Historically, it has consistently offered returns of approximately 13% annually. It suits investors who want broad market exposure and can stay invested for 5 years or more.
Type: Hybrid (Equity + Debt)
The HDFC Balanced Advantage Fund dynamically adjusts its asset allocation between equity and debt depending on market conditions. When markets are volatile, it increases debt allocation to reduce risk, and when favorable, it raises equity exposure for growth. This makes it a great choice for beginners wanting moderate growth with lower risk. Returns typically range from 8-12% annually, with less sharp dips compared to pure equity funds.
Type: Small Cap Equity Fund
Small-cap funds invest in smaller, emerging companies with high growth potential but also higher risk and volatility. SBI Small Cap Fund targets promising companies that could deliver significant gains over time. This fund is best suited for younger investors with a long-term horizon (5-7 years or more) who can tolerate short-term fluctuations in exchange for potentially higher returns. It has shown impressive returns, averaging 15-18% annually over the past five years.
Type: Aggressive Hybrid Fund
This fund combines equity and debt investments to strike a balance between growth and risk mitigation. The equity part offers growth opportunities, while the debt part protects against market fluctuations. It offers moderate returns of about 10-12% annually. Its hybrid nature makes it less volatile than pure equity funds, helping beginners stay invested through market cycles.
These funds offer a range of options, from conservative to aggressive, ensuring that beginners can select one that aligns with their financial goals, risk appetite, and investment horizon. Starting with a Systematic Investment Plan (SIP) in any of these funds can help build disciplined wealth steadily over time.
