Best Equity Mutual Funds in India: Meaning, Types and Top Schemes for 2025
Active investors seeking growth and willing to take on moderate to high risks often choose equity-oriented mutual funds to outpace inflation. Equity mutual funds can be a game-changer for anyone looking to grow their wealth, but with so many options out there, picking the right one can feel overwhelming.
This blog will break down some of the high return equity mutual funds in India (based on 5Y CAGR) and what you need to consider before investing—so you can make smarter, more confident choices for your financial future.
List of Best Equity Mutual Funds in India 2025
Here is a comprehensive equity mutual funds list (India) for 2025:
| Name | Sub Category | AUM (Rs. in cr.) | Expense Ratio (%) | CAGR 3Y (%) | CAGR 5Y (%) |
|---|---|---|---|---|---|
| Quant Small Cap Fund | Small Cap Fund | 22,832.42 | 0.68 | 20.58 | 48.26 |
| Quant Infrastructure Fund | Sectoral Fund - Infrastructure | 2,913.62 | 0.75 | 19.17 | 41.74 |
| ICICI Pru Commodities Fund | Thematic Fund | 2,390.54 | 1.05 | 16.49 | 37.79 |
| Quant ELSS Tax Saver Fund | Equity Linked Savings Scheme (ELSS) | 9,486.28 | 0.5 | 14.91 | 37.07 |
| Quant Flexi Cap Fund | Flexi Cap Fund | 6,188.79 | 0.61 | 17.41 | 36.69 |
| Nippon India Small Cap Fund | Small Cap Fund | 50,826.29 | 0.74 | 20.67 | 36.55 |
| Quant Mid Cap Fund | Mid Cap Fund | 7,615.71 | 0.62 | 19.75 | 36.13 |
| Bandhan Small Cap Fund | Small Cap Fund | 8,474.84 | 0.46 | 24.56 | 35.48 |
| ICICI Pru Infrastructure Fund | Sectoral Fund - Infrastructure | 6,886.49 | 1.16 | 28.31 | 34.91 |
| Bandhan Infrastructure Fund | Sectoral Fund - Infrastructure | 1,399.72 | 0.87 | 25.63 | 34.50 |
Disclaimer: Please note that the above table is for educational purposes only, and is not recommendatory. Please do your own research or consult your financial advisor before investing. The data is derived from Tickertape Stock Screener and is subject to real-time updates.
Note: The data on the list of the best equity mutual funds is from 17th March 2025. This data is derived from the Tickertape Mutual Funds Screener.
- Plan: Growth
- Category: Equity
- 5Y CAGR: Sorted from Highest to Lowest
🚀 Pro Tip: You can use Tickertape’s Mutual Fund Screener to research and evaluate funds with over 50+ pre-loaded filters and parameters.
Best Equity Mutual Funds for Long-Term: An Overview
Here is a brief overview of the top 10 equity mutual funds in India listed above:
Quant Small Cap Fund
The Quant Small Cap Fund is an open-ended equity scheme investing predominantly in small-cap companies. It seeks to provide long-term capital appreciation by identifying high-growth potential businesses within the small-cap segment. The fund is managed by experienced professionals who utilise a dynamic investment approach to navigate market opportunities and risks.
Quant Infrastructure Fund
Established on 7th January 2013, the Quant Infrastructure Fund focuses on investing in companies engaged in infrastructure development and related sectors. The fund aims to capitalise on the growth prospects of infrastructure projects, offering investors potential long-term capital appreciation. It employs a strategic investment approach to select companies poised to benefit from infrastructure expansion.
ICICI Pru Commodities Fund
The ICICI Prudential Commodities Fund is an open-ended equity scheme primarily investing in companies engaged in commodity and commodity-related sectors. The fund aims to provide long-term wealth creation by capitalising on opportunities in the commodities market. It is managed by ICICI Prudential Mutual Fund, one of India’s leading asset management companies, known for its robust investment processes and experienced fund management team.
Quant ELSS Tax Saver Fund
Quant ELSS Tax Saver Fund is an Equity Linked Savings Scheme (ELSS) offering tax benefits under Section 80C of the Income Tax Act. The fund invests predominantly in equity and equity-related instruments, aiming for long-term capital appreciation. Widely regarded as one of the best tax-saving equity funds in India, it comes with a mandatory lock-in period, aligning with investors’ tax planning and wealth creation objectives.
Quant Flexi Cap Fund
The Quant Flexi Cap Fund is an open-ended dynamic equity scheme investing across large-cap, mid-cap, and small-cap stocks. This flexible investment strategy allows the fund to adapt to varying market conditions, seeking optimal returns. It is managed by Quant Mutual Fund, known for its data-driven and active investment approach.
Nippon India Small Cap Fund
Launched on 16th September 2010, the Nippon India Small Cap Fund focuses on investing in small-cap companies with high growth potential. The fund aims to provide long-term capital appreciation by identifying and investing in emerging businesses. It is managed by Nippon India Mutual Fund, one of India’s prominent asset management companies.
Quant Mid Cap Fund
Established on 7th January 2013, the Quant Mid Cap Fund invests primarily in mid-cap companies, aiming to capture growth opportunities in this segment. The fund seeks long-term capital appreciation by focusing on companies with robust growth prospects. It is managed by Quant Mutual Fund, leveraging a strategic investment approach.
Bandhan Small Cap Fund
Launched on 3rd February 2020, the Bandhan Small Cap Fund is an open-ended equity scheme investing predominantly in small-cap companies. The fund aims to provide long-term capital growth by identifying high-potential businesses within the small-cap segment. It is managed by Bandhan Mutual Fund, which underwent rebranding in March 2023 following the acquisition of IDFC Asset Management Company.
ICICI Pru Infrastructure Fund
The ICICI Prudential Infrastructure Fund focuses on investing in companies engaged in infrastructure and allied sectors. The fund aims to provide long-term capital appreciation by capitalising on the growth potential of infrastructure development in India. It is managed by ICICI Prudential Mutual Fund, known for its extensive experience and robust investment processes.
Bandhan Infrastructure Fund
The Bandhan Infrastructure Fund invests in companies operating within the infrastructure domain, including energy, real estate, and transportation sectors. The fund aims to provide long-term capital appreciation by leveraging opportunities in the expanding infrastructure sector. It is managed by Bandhan Mutual Fund, which rebranded in March 2023 after acquiring IDFC Asset Management Company.
How to Invest in Equity Mutual Funds?
Investing in equity mutual funds can be a straightforward process. Here’s a guide to get you started:
- Open a demat/trading/brokerage account. Investors can open a demat account with smallcase!
- Register online at any AMC website.
- Explore different equity funds to figure out which one suits your investment objectives.
- Investors can use tools like the Tickertape Mutual Fund Screener to sort through these funds and explore their fundamentals and performance in the past.
- Proceed to invest by clicking on the appropriate option and specifying the amount and investment mode (SIP or Lumpsum).
- Submit your KYC details, including your PAN number and bank details, to finalise your investment.
Note: It is important to conduct thorough research and consult a financial advisor before investing in anything.
However, if you’re confused about which stocks to pick, you can explore smallcases:
- smallcases are readymade portfolios of stocks/ETFs, that are based on a theme idea or strategy
- They’re created and managed by SEBI-registered experts
- smallcase.com offers over 500+ stock portfolios, created by 180+ managers
- Some of the popular smallcases among new investors are as follows:
Disclosures for aforementioned smallcases
What are Equity Mutual Funds?
An equity fund, as per SEBI regulations in India, is a mutual fund primarily investing at least 65% of its assets in equity stocks. Unlike debt and hybrid funds, equity mutual funds carry higher risk but offer greater returns. Their performance is influenced by market fluctuations.
Equity mutual funds can be actively or passively managed and classified based on market capitalisation, investment style, and geographical focus. Market capitalisation categories include large cap, mid cap, small cap, and multi cap funds. Sector-specific funds target industries like FMCG or banking, while international funds invest in overseas stocks. Equity-linked savings schemes, categorised as equity mutual funds, allocate over 80% of their assets to equity, providing a diversified portfolio and qualifying for tax deductions under section 80C.
Types of Equity Mutual Funds
Equity funds vary based on their management approach: Active or Passive.
In Active Funds, a fund manager conducts market research, analyses company performance, and selects the best stocks for investment.
In Passive Funds, the fund manager constructs a portfolio that mimics a popular market index, such as Sensex or Nifty.
Various types of direct equity funds exist, each with distinct characteristics:
- Large-cap equity mutual funds invest a minimum of 80% in SEBI-authorized large-cap stocks.
- Mid Cap funds allocate at least 65% to SEBI-classified mid-cap stocks.
- Small Cap funds invest a minimum of 65% in SEBI-defined small-cap stocks.
- Large and Mid Cap funds distribute investments between large-cap and mid-cap stocks, with a minimum threshold of 35% for each.
- Multi-Cap funds allocate a minimum of 75% to equity and a minimum of 25% to large-, mid-, and small-cap stocks.
Additional equity mutual fund schemes based on investing styles
- Dividend Yield Funds primarily invest in dividend-yielding stocks, with at least 65% in equity-related instruments.
- Value Funds follow a value investment strategy, investing 65% in equity and related securities.
- Contra Funds pursue a contrarian investment strategy, allocating 65% to equity and related securities.
- Sectoral/Thematic Funds invest 80% of assets in a specific theme or sector, as mandated by SEBI.
- Focused Funds can invest in a maximum of 30 stocks from small, mid, or large caps, with 65% in equity and related instruments.
- ELSS (Equity Linked Savings Scheme) has a 3-year lock-in period, offering tax benefits and requiring 80% investment in equity and related securities.
How do Equity Funds Work?
Equity mutual funds primarily invest in company stocks, allowing investors to become partial owners of those companies. When investing in equity funds, the choice of stocks depends on the fund’s category, which is regulated by SEBI and determined by its investment style or universe. For example, Large Cap Funds must invest at least 80% of their assets in India’s top 100 companies by market capitalisation, making them one of the best equity mutual funds for long-term stability. On the other hand, Mid Cap Funds invest a minimum of 65% in mid-sized companies, aiming for higher returns with a balanced approach to risk.
Equity fund managers, who are market and finance experts, carefully select stocks based on detailed analysis of company profitability, sector resilience, and economic conditions. Their research helps determine which equity funds are best by guiding decisions on stock selection, purchase prices, and allocation quantities. Fund managers continuously track mutual fund performance and market trends, allowing them to make tactical decisions to optimise returns on equity mutual funds.
If a company underperforms, it may be removed from the portfolio, while high-growth stocks are added early to capture potential gains. For those looking to invest in equity, fund managers’ expertise plays a key role in managing volatility and enhancing returns, making equity funds a popular choice among investors seeking long-term growth and high-return mutual funds.
How do Equity Funds Earn?
The top equity funds generate returns through two primary mechanisms:
- Firstly, they capitalise on the appreciation of stock prices. The fund manager continuously monitors the market, strategically choosing when to sell stocks that have significantly appreciated. The profit realised from selling at a higher price than the purchase price constitutes capital gains. The fund manager reinvests these gains to facilitate compounding, thereby increasing the overall returns on investment.
- Secondly, equity funds receive dividends from the companies in which they hold ownership stakes. When companies perform well, they distribute profits to shareholders in the form of dividends. The fund manager allocates these dividends strategically to further enhance returns.
Features of the Best Equity Mutual Funds
When evaluating the difference between equity and mutual funds, especially in choosing the best equity mutual funds for long-term investment, it’s essential to consider these specific features that distinguish top performers:
Consistent Performance
The top equity mutual funds often showcase consistent performance across various market cycles, highlighting their resilience. Analysing long-term mutual fund performance, particularly return on equity mutual funds, helps investors assess stability and growth potential.
Low Expense Ratios
Cost efficiency plays a significant role when you invest in equity funds. The best high-returns mutual funds typically have low expense ratios, allowing a higher portion of returns to remain in your pocket. Evaluating the expense ratio is key when comparing mutual funds and equity options.
Experienced Fund Management
The involvement of seasoned managers, especially in the best equity mutual funds for long term, greatly impacts the success of the funds. Their expertise is essential for navigating market fluctuations and maximising return on equity mutual funds.
Diversification Strategies
A diversified portfolio is vital in top-growth mutual funds. When choosing an equity fund, it’s imperative to focus more on the best diversified equity mutual funds over the ones that do not. The fund must spread its investments across sectors. Diversification is a critical factor in mitigating risks associated with long-term mutual funds.
Risk-Adjusted Returns
For those looking to invest in equity funds, examining risk-adjusted returns is essential. It provides a complete picture of how well a fund balances risk and reward, a key measure when comparing which equity mutual fund is best for your portfolio.
Transparent Communication
Top-performing equity mutual funds maintain clear communication with investors, detailing strategies, portfolio compositions, and market outlooks. This transparency helps investors make confident decisions about which equity mutual funds are best suited to their needs.
Who Should Invest in the Best Equity Mutual Funds?
Equity-oriented funds, with a minimum of 65% in equity or equity-oriented securities, qualify for tax computation benefits. Conversely, all other schemes are categorised as Other schemes.
For those interested in stock market investments but lacking time or expertise, Equity Mutual Funds provide a convenient option. Simply choose a suitable fund and invest regularly, leaving the market analysis to the fund manager. They assess key indicators like company profitability, survival resilience, and sector performance.
Investors desiring equity exposure with minimal amounts can start with Equity Funds, beginning at just ₹100.
Equity Funds, though short-term volatile, offer the potential for substantial long-term returns. Investors with goals beyond 5 years, such as retirement or children’s education, can consider Equity Funds. Even for those without specific goals but seeking higher returns over a minimum 5Y horizon, Equity Funds are a viable option.
The top equity funds for SIP also cater to investors aiming for both tax savings and long-term wealth growth. Equity Linked Saving Schemes (ELSS), a type of Equity Fund, enables investors to reduce taxable income by ₹1.5 lakh under Section 80C while earning attractive returns.
Factors to Consider Before Investing in the Best Equity Mutual Funds
Here are the key factors to consider before investing in the best equity mutual funds:
Performance History
High-performing large cap equity mutual funds demonstrate a consistent track record of delivering superior returns over multiple years, outperforming benchmarks and competitor funds. Examining this performance history is crucial in identifying potential investment opportunities.
Business Cycle Evaluation
To pinpoint the best equity savings funds, investors should assess a fund’s performance across various business cycles. This analysis provides insights into the fund’s resilience and adaptability, offering a more comprehensive view of its potential for sustained success.
Clear Objectives
Long-term success in equity investments is often linked to funds with well-defined objectives. Funds that articulate clear goals can effectively diversify investments, ultimately leading to more favourable returns for investors.
Objective Assessment
After thoroughly evaluating a fund’s objectives, investors can better predict its potential for delivering satisfactory yields. This step is crucial in aligning investment strategies with personal financial goals.
Extended Performance History
Funds with an extended performance history are often considered more reliable choices. This is particularly important because it allows investors to assess a fund’s performance not only in favourable market conditions but also during downturns, offering a more comprehensive perspective.
Expense Ratio Consideration
In the search for the best equity mutual funds in 2024, investors should pay attention to the expense ratio. Lower fees charged by the fund house for managing investments result in reduced overall expenses for investors, making these funds more cost-effective.
Fund Manager Expertise
Successful and the best equity funds are not solely driven by market dynamics; the expertise of the fund manager is equally vital. Funds managed by individuals with a proven track record tend to deliver profitable equity mutual fund returns consistently.
Manager’s Role in Success
Fund managers play a pivotal role in handling investors’ money, and their expertise significantly contributes to a fund’s success. Assessing the history and expertise of the fund manager provides investors with confidence in entrusting their investments to capable hands.
Risks Involved While Investing in the Best Equity Mutual Funds
Here are a few risks to consider before investing in the best equity mutual funds:
- Market Risk: Investing in equity mutual funds exposes investors to market risk, which arises from the unpredictable performance of the market. Factors such as inflation, deflation, political instability, and fluctuations in interest rates contribute to this risk. When the market experiences poor performance, investors may incur losses, highlighting the inherent volatility associated with equity investments.
- Interest Rate Risk: Another crucial risk in equity mutual funds is interest rate risk, contingent upon fluctuations in credit availability and borrower demand. If interest rates rise during the investment period, the prices of securities may decrease. This inverse relationship between interest rates and security prices can impact the overall value of the investment, making it imperative for investors to consider and manage this risk.
- Liquidity Risk: Investors face liquidity risk when redeeming investments without incurring losses in the fund’s value. Liquidity challenges may arise due to various factors, including increases in interest rates and fluctuations in currency value. These circumstances can make selling funds and arranging capital a complex process, underscoring the importance of understanding and navigating liquidity risk in the context of equity mutual fund investments.
Benefits of Investing in the Best Equity Mutual Funds
When exploring the landscape of investment opportunities, the advantages of choosing the best equity mutual funds become apparent. Here’s a breakdown of the key benefits:
Diversification for Risk Mitigation
Opting for top-performing equity mutual funds allows investors to access a diversified portfolio of stocks. This diversification is a powerful risk management strategy, spreading investments across various sectors and companies. Consequently, the impact of poor performance in a single stock is minimised, providing a more stable and resilient investment.
Active Management for Strategic Decision-Making
The best equity mutual funds are actively managed, meaning that investment professionals make strategic decisions based on market analysis and opportunities. This proactive approach allows the fund to capitalise on favourable market conditions and adjust the portfolio to navigate challenges, potentially leading to better returns over time.
Liquidity and Accessibility
One of the practical benefits of equity mutual funds is their liquidity. Investors can easily buy or sell fund units at the net asset value (NAV). This liquidity ensures flexibility and accessibility, enabling investors to manage their positions in response to changing market conditions or individual financial goals.
Professional Fund Management Expertise
Investing in top equity mutual funds grants access to professional fund management expertise. Experienced investment professionals actively monitor the market, conduct thorough research, and make informed decisions on behalf of investors. This professional management adds a layer of confidence and expertise to the investment strategy.
Tax Efficiency for Long-Term Gains
Long-term investors can benefit from the tax advantages associated with equity mutual funds. Capital gains on investments held for over a year may qualify for preferential tax treatment. This tax efficiency can enhance overall returns and is an important consideration for those with a focus on building wealth over an extended period.
Transparency for Informed Decision-Making
The best equity mutual funds prioritise transparency, providing investors with regular updates and disclosures. This transparency empowers investors with the information needed to make informed decisions, fostering a sense of confidence and clarity about the performance and strategy of the fund.
How to Choose the Best Equity Mutual Funds for Investing?
How can you identify the best equity mutual funds for SIP? Here’s a quick guide to determine if they align with your financial goals:
- Long-Term Growth: Seek steady wealth expansion over time by embracing the patience required for substantial returns.
- Risk Comfort: Embrace market fluctuations with a high-risk tolerance. Short-term volatility is expected in even the best performing equity mutual funds. Hence, the investors should focus more on the long-term returns of the fund.
- Financial Planning: Connect equity funds to a clear long-term financial plan or retirement goal. View them as a strategy for potential wealth growth with added tax advantages for future financial security.
- Active Monitoring: Stay informed and keep a watchful eye on your investments. Regularly monitor market trends and economic indicators to make well-informed decisions.
- Tax-Efficient Choices: If you’re someone who values tax efficiency, explore equity-linked savings schemes (ELSS) for dual benefits – tax savings and potential wealth growth.
- Inflation Hedge: Safeguard your savings against inflation. Consider equity funds as a potential avenue to outpace inflation, ensuring your savings maintain their purchasing power over time.
What are the Returns on the Best Equity Mutual Funds & How are they Calculated?
Calculating returns on equity mutual funds involves a straightforward yet crucial process. Total returns comprise two components: capital appreciation and dividend income. The former represents the increase in the fund’s net asset value (NAV) over time, while the latter accounts for any dividends distributed to investors.
To compute the overall return, divide the change in NAV by the initial NAV, then add any dividends received. Express this figure as a percentage to gauge the fund’s performance accurately. It’s essential to consider the timeframe for evaluation, as short-term fluctuations may not reflect the fund’s true potential.
Investors can leverage various metrics, such as Compound Annual Growth Rate (CAGR), to assess long-term performance. Keep in mind that past performance doesn’t guarantee future results. Regularly reviewing a fund’s methodology and comparing it with market benchmarks ensures a more comprehensive understanding of its returns.
Taxation on Equity Mutual Funds
Equity mutual funds are usually taxed according to their holding period. Being aware of these tax implications is essential for making informed financial decisions. Here’s the latest taxation on equity mutual funds:
Short-Term Capital Gains Tax
Any gains made when holding equity mutual funds for less than 12 months are considered short-term capital gains. The Union Budget 2024-25 increased the tax rate on these gains to 20%. The STCG tax rate was previously 15%.
Long-Term Capital Gains Tax
For equity mutual funds held for over a year, gains are classified as long-term capital gains. The new budget introduces these key changes:
- Tax-Free Limit: The capital gains up to ₹1.25 lakh per year are tax-free. This is an increase from the previous limit of ₹1 lakh.
- Tax Rate: The gains exceeding ₹1.25 lakh are now taxed at a flat rate of 12.5%. This is an increase from the previous rate of 10%.
- Indexation: The benefit of indexation, which allowed investors to adjust the purchase price for inflation, has been removed for all asset classes, including equity mutual funds.
Indexation was a method that allowed investors to adjust the purchase price of assets for inflation. This adjustment reduced taxable profits when selling assets like property or gold. Previously, these long-term capital gains were taxed at 20%. The new rule imposes a flat 12.5% tax on all long-term capital gains but eliminates any indexation benefits.
| Capital Gains Tax | Holding Period | Old Rate | New Rate |
| Short-Term Capital Gains (STCG) | Less than 12 months | 15% | 20% |
| Long-Term Capital Gains (LTCG) | More than 12 months | 10% | 12.50% |
To Wrap It Up…
To sum up, the exploration of equity mutual funds has shed light on crucial aspects to consider when navigating this dynamic investment landscape. From historical performance metrics to expense ratios and fund managers’ strategies, pursuing excellence in equity funds demands a discerning approach. Investors should prioritise aligning fund choices with their risk tolerance, financial goals, and investment horizon.
Regular monitoring and staying attuned to market dynamics remain essential for those seeking to optimise their equity investment portfolio. The journey towards identifying the best mutual funds for long term investments is an ongoing process, requiring diligence, research, and a commitment to informed decision-making in the ever-evolving realm of financial markets.
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Frequently Asked Questions(FAQs) on Best Equity Mutual Funds
The equity funds with highest returns tend to invest in a diversified portfolio of stocks, aiming for a balanced mix that aligns with their investment objectives and strategy. These funds typically focus on sectors and industries with growth potential, aiming to provide investors with a combination of capital appreciation and risk mitigation.
The returns on the best equity mutual funds vary based on market conditions and fund performance. It is crucial to regularly check the fund’s historical performance and consult with a financial advisor to make informed investment decisions.
Equity mutual funds are designed for long-term investment and are influenced by market fluctuations. They are typically suited for investment horizons of five years or more. Market timing can be unpredictable, so many investors use a systematic investment approach (SIP) to manage volatility. Factors like financial goals, risk tolerance, and investment duration play a role in determining suitability.
Most equity mutual funds do not have a lock-in period, allowing investors to redeem their units anytime. However, Equity-Linked Savings Schemes (ELSS) have a lock-in period, as they qualify for tax benefits under Section 80C. It’s essential to check the fund details before investing.
