Mutual funds are pooled investment products where money from many investors is combined and invested in a diversified portfolio of securities like stocks, bonds, or money market instruments, managed by professional fund managers.
What is a mutual fund?
A mutual fund is an investment vehicle that collects money from multiple investors and invests it according to a defined objective, such as growth, income, or a mix of both. Each investor receives units of the fund, and the value of these units (NAV) moves up or down based on the performance of the underlying portfolio. This structure gives small investors access to diversification and professional management that may otherwise be difficult to achieve individually.
Main mutual fund categories
Broadly, mutual funds can be classified by the underlying asset class and investment style. Key high-level categories include equity funds (invest mainly in shares for long‑term growth), debt funds (invest in bonds and money‑market instruments for income and relative stability), hybrid funds (mix of equity and debt), and other categories such as money‑market and gold funds. Within equity, regulators and industry bodies further define sub‑categories such as large‑cap, mid‑cap, small‑cap, flexi‑cap, and ELSS (tax‑saving) schemes.
Popular types for long‑term goals
For a long‑term investor in India aiming for growth, commonly used categories are: equity large‑cap funds (focus on top‑market‑cap companies and relatively lower volatility), flexi‑cap funds (can move across large, mid, and small caps dynamically), and ELSS funds that provide tax benefits under Section 80C with a 3‑year lock‑in. Hybrid (aggressive or balanced advantage) funds are also used by moderate‑risk investors to get some equity growth with built‑in allocation to debt for stability.
Sample list of well‑regarded funds (India, 2025)
Below is a concise, illustrative list of some widely followed direct‑plan funds by popular categories, based on recent performance rankings and industry data from Indian mutual fund platforms; treat this as a research shortlist, not personalized advice.
Example equity and ELSS funds
| Category | Example fund (Direct – Growth) | Key point (high level) |
|---|---|---|
| Flexi‑cap | Parag Parikh Flexi Cap Fund Direct Growth | Very large and fast‑growing AUM; flexi‑cap mandate across Indian and foreign equities. indmoney |
| Flexi‑cap | HDFC Flexi Cap Fund Direct Growth | Large, diversified flexi‑cap fund with significant investor base. indmoney |
| Flexi‑cap | Kotak Flexicap Fund Direct Growth | Established flexi‑cap fund with sizable AUM and long history. indmoney |
| Large‑cap | Large‑cap funds list (e.g., top‑ranked on Groww/ETMoney) | Platforms highlight multiple large‑cap schemes delivering competitive 3–5 year returns. groww |
| ELSS (tax‑saving) | Top ELSS funds list (Groww category page) | Curated list of tax‑saving funds with strong risk‑adjusted returns and 3‑year+ track record. groww |