Navigating Mutual Fund Investments: A Step-by-Step Guide
In the digital age, investing in mutual funds has become a convenient and accessible way to grow wealth and achieve financial goals. Online platforms, such as our platform, enable investors to complete their KYC (Know Your Customer) process and start investing without stepping out of their homes, offering an easy-to-understand format to navigate through mutual fund scheme options.
One of the crucial aspects to consider when investing in mutual funds is diversification, a key principle of successful investing. Diversification helps to spread the risk across various assets, ensuring a well-balanced portfolio.
When it comes to mutual funds, there are different categories, each offering different levels of risk and returns. For instance, high-risk, equity-oriented funds focusing on midcap and smallcap segments, thematic PSU equity funds, and well-performing index funds have shown remarkable returns in July 2025.
Let's take a look at some of the top-performing mutual funds in India as of mid-July 2025:
1. Invesco India PSU Equity Fund Direct Growth: This fund, which targets capital appreciation by investing predominantly in central and state government-owned companies, has delivered impressive 3-year and 5-year annualized returns of 39.83% and 31.37%, respectively.
2. Motilal Oswal Midcap Fund Direct Growth: This midcap fund has delivered strong returns, reflecting its focus on mid-cap companies with growth potential. With 3-year and 5-year annualized returns of 33.81% and 37.40%, respectively, it stands out as a high-performing mutual fund.
3. HDFC Small Cap Fund - Growth Option: This is a notable small cap fund that has consistently performed well over long investment horizons, with a compound annual growth rate (CAGR) of 19.41% as of July 17, 2025.
4. Aditya Birla Sun Life Nifty Midcap 150 Index Fund Direct-Growth, Nippon India Nifty Midcap 150 Index Fund Direct-Growth, and ICICI Prudential Nifty Smallcap 250 Index Fund Direct-Growth are other index funds that offer diversified exposure with competitive returns by tracking midcap and smallcap indices.
5. Mirae Asset ELSS Tax Saver Fund is frequently listed among the best flexi-cap and ELSS tax-saving funds, standing out for a balanced approach combining growth and tax benefits.
It's important to note that exit load, a fee levied by mutual funds when you sell or redeem your mutual fund units before a specific tenure, calculated as the percentage of the NAV of mutual funds, varies from fund to fund. Not every fund charges an exit load.
When investing in mutual funds, it's crucial to consider factors like investment objective, risk profile, fund performance, and fees and expenses. Direct plans of mutual fund schemes, which can be invested through SEBI-registered RTAs, mutual fund companies, or online platforms, have lower expense ratios because there are no intermediaries involved. Investing in mutual funds through banks, NBFCs, mutual fund distributors, and SEBI registered financial advisors involves investing in a 'Regular Plan', which may result in higher expenses due to commissions for intermediaries.
The KYC process is mandatory for financial institutions, including mutual fund companies, under the Prevention of Money Laundering Act (2002). The process can be completed offline through mutual fund company offices or Registrar and Transfer agents (RTAs), or online through KYC Registration Agencies (KRAs) or specific investment platforms.
Before investing, it's essential to define your financial objectives and consider the potential risks and rewards associated with different mutual fund categories. Over a long period, the difference in returns between Direct and Regular plans could amount to a significant sum.
In conclusion, the highest returns in July 2025 are seen predominantly in high-risk, equity-oriented funds focusing on midcap and smallcap segments, alongside thematic PSU equity funds and well-performing index funds. Investors should consider their risk appetite and investment horizon, as these funds have been rewarding over 3- and 5-year periods but involve higher volatility. Happy investing!
[1] Source:
- For those interested in personal-finance and growing wealth, equity funds, such as the top-performing Invesco India PSU Equity Fund Direct Growth, can provide impressive returns, making them worth considering when investing in mutual funds.
- Liquid funds, which offer relatively low risk and quick access to money, might be a suitable choice for individuals seeking short-term investment options within the mutual fund category.
- Apart from equity funds, mutual funds also include debt funds that invest primarily in fixed income instruments like government securities and bonds, providing comparatively lower risk and returns.
