It takes patience, time, and a realistic plan to grow your money. Mutual funds can help with that. They provide an easy and efficient way for investors to contribute to the growth of the economy over the long run. Selecting the right mutual funds can have a significant impact on your long-term financial security, retirement, or your child’s future.
We will discuss some of the top long-term mutual funds available in this blog and explain how to choose the ones that best fit your objectives.
Factors to Consider Before Choosing a Long-term Mutual Fund
Here are factors that to be considered before choosing a Long-Term Mutual Fund:
1. Begin by finding a clear objective
Clearly defining the purpose of your investment (retirement, education for children, accumulation of wealth over time, etc.) helps you stay focused on your blogs and reduces the chances of emotional decision-making during market fluctuations.
2. Take your time to think
If you want to make money over the long term, staying invested for at least 5–10 years is generally recommended. More time helps smooth out market ups and downs.
3. Consider Risks
Choose a fund that matches with your risk tolerance level. If you don’t like volatility, stick with large-cap or index funds. Mid- and small-cap funds may offer higher growth potential over time but come with higher volatility.
4. Know where the fund invests
Find out if the fund only invests in large, medium, or small companies, or a mix of all three or mix equities with bonds and commodities. It is more important to have a clear and consistent plan than to have multiple themes.
5. Never believe the hype; look for consistency.
Do not run after the best performer from last year. Funds that give you steady returns no matter what the market is doing are better long-term friends.
The best long-term mutual fund isn’t the one with the most bells and whistles. It’s the one that meets your needs, lets you stay invested for years without worrying about it, and is comfortable with the level of risk.
List of Best Long-term Mutual Funds to Invest In
The following are the top 10 list of Mutuals Funds for long-term investment:
| S. No | Funds | Latest NAV | AUM (Cr.) | Expense Ratio | Exit Load (Period) | Sharpe Ratio |
|---|---|---|---|---|---|---|
| 1 | SBI Focused Fund | 381.1 | 42,773 | 1.53% | 0.25 (30D) | 1.08 |
| 2 | ICICI Prudential Focused Equity Fund | 97.86 | 14,146 | 1.70% | 1.00 (365D) | 1.27 |
| 3 | ICICI Prudential Large & Mid Cap Fund | 1,052.58 | 26,939 | 1.63% | 1.00 (30D) | 1.21 |
| 4 | Kotak Focused Fund | 27.03 | 3,942 | 1.88% | 1.00 (365D) | 0.89 |
| 5 | HDFC Flexi Cap Fund | 2,072.35 | 94,069 | 1.35% | 1.00 (365D) | 1.36 |
| 6 | ICICI Prudential Large Cap Fund | 115.51 | 78,160 | 1.40% | 1.00 (365D) | 1.04 |
| 7 | Aditya Birla Sun Life Flexi Cap Fund | 1,893.33 | 24,815 | 1.65% | 1.00 (90D) | 0.93 |
| 8 | ICICI Prudential Midcap Fund | 315.28 | 7,055 | 1.85% | 1.00 (365D) | 1.00 |
| 9 | HDFC Focused Fund | 238.74 | 26,230 | 1.61% | 1.00 (365D) | 1.41 |
| 10 | Tata Flexi Cap Fund | 24.98 | 3,670 | 1.89% | 0.50 (30D) | 0.90 |
Read Also: Top 10 High-Return Mutual Funds in India
Best Long-Term Mutual Funds – An Overview
1. SBI Focused Fund
The fund follows a concentrated investment approach and holds a limited number of high-conviction stocks. Minimum investment in this fund is INR 5,000. Minimum SIP amount is INR 500. The fund was launched on 11 October, 2004. Some of the top holdings of the fund include HDFC Bank, SBI, Muthoot Finance, Bajaj Finserv etc.
| 1-Year Return | 3-Year Return (CAGR) | 5-Year Return (CAGR) | No. of Stocks | Benchmark |
|---|---|---|---|---|
| 14.20% | 18.48% | 16.78% | 33 | S&P BSE 500 |
2. ICICI Prudential Focused Equity Fund
The idea of this fund is to back businesses with strong fundamentals. It is best suited for long-term investors. Minimum investment amount is INR 5,000. Minimum SIP Amount is 100. The launch date of the fund was 28th May 2009. Some of the top holdings of the fund include Infosys, ICICI Bank, HDFC Bank Axis Bank. etc.
| 1-Year Return | 3-Year Return (CAGR) | 5-Year Return (CAGR) | No. of Stocks | Benchmark |
|---|---|---|---|---|
| 15.15% | 23.51% | 22.07% | 41 | S&P BSE 500 |
3. ICICI Prudential Large & Mid Cap Fund
The fund has an objective to balance stability and growth by investing in both large and mid-sized companies. Large-cap stocks provide relative stability while mid-caps offer higher growth potential. Minimum Investment amount is INR 5,000, and min SIP amount is INR 100. The fund was launched on 9 July 1998. Some of the top holdings include Axis Bank, SBI Cards, Nykaa, ICICI Bank, etc.
| 1-Year Return | 3-Year Return (CAGR) | 5-Year Return (CAGR) | No. of Stocks | Benchmark |
|---|---|---|---|---|
| 12.63% | 21.47% | 23.17% | 108 | S&P BSE 500 |
4. Kotak Focused Fund
Kotak Focused Fund uses bottom-up stock selection to invest in a small portfolio of top companies. Those with solid balance sheets, competent management, and long-term earnings growth are preferred by the fund. The minimum investment amount is INR 100, and the minimum SIP amount is also INR 100. The fund was launched on 16 July 2019. Some of the top holdings include ICICI Bank, HDFC Bank, Bharti Airtel, Zomato (Eternal Ltd.), etc.
| 1-Year Return | 3-Year Return (CAGR) | 5-Year Return (CAGR) | No. of Stocks | Benchmark |
|---|---|---|---|---|
| 12.45% | 17.76% | 17.27% | 30 | S&P BSE 500 |
5. HDFC Flexi Cap Fund
Depending on market conditions, the HDFC Flexi Cap Fund invests in large-cap, mid-cap, and small-cap stocks to provide flexibility. In addition to capturing opportunities across segments, its diversified allocation helps in risk management. The minimum investment amount is INR 100, and the minimum SIP amount is also INR 100. The fund was launched on 1 January 1995. Some of the top holdings include ICICI Bank, HDFC Bank, Axis Bank, and SBI, among others.
| 1-Year Return | 3-Year Return (CAGR) | 5-Year Return (CAGR) | No. of Stocks | Benchmark |
|---|---|---|---|---|
| 10.55% | 21.70% | 23.76% | 57 | S&P BSE 500 |
6. ICICI Prudential Large Cap Fund
This fund mostly invests in large-cap companies that are well-known and prominent in their respective sectors. Compared to mid-cap and small-cap funds, this one is less volatile. The minimum investment amount is INR 100, and the minimum SIP amount is also INR 100. The fund was launched on 23 May 2008. Some of the top holdings include ICICI Bank, HDFC Bank, Reliance, Larsen & Toubro, and Airtel, among others.
| 1-Year Return | 3-Year Return (CAGR) | 5-Year Return (CAGR) | No. of Stocks | Benchmark |
|---|---|---|---|---|
| 10.16% | 18.51% | 18.18% | 88 | S&P BSE 500 |
7. Aditya Birla Sun Life Flexi Cap Fund
Aditya Birla The Sun Life Flexi Cap Fund invests in a wide range of market capitalizations with a flexible investment approach. The fund focuses on companies that are fundamentally strong and uses both growth and value styles. The minimum investment amount is INR 100, and the minimum SIP amount is also INR 100. The fund was launched on 27 August 1998. Some of the top holdings include ICICI Bank, HDFC Bank, Infosys, Kotak Mahindra, etc.
| 1-Year Return | 3-Year Return (CAGR) | 5-Year Return (CAGR) | No. of Stocks | Benchmark |
|---|---|---|---|---|
| 9.90 | 18.43% | 16.49% | 78 | S&P BSE 500 |
8. ICICI Prudential Midcap Fund
The ICICI Prudential Midcap Fund invests in mid-sized companies. The fund may be volatile in the short term, but it can give you higher returns over the long term. It is good for investors who are willing to take more risk and are willing to wait a long time for their money to grow. The minimum investment amount is INR 5,000, and the minimum SIP amount is also INR 100. The fund was launched on 28 October 2004. Some of the top holdings include Muthoot Finance, BSE, Jindal Steel, UPL, MCX, etc.
| 1-Year Return | 3-Year Return (CAGR) | 5-Year Return (CAGR) | No. of Stocks | Benchmark |
|---|---|---|---|---|
| 10.86% | 23.41% | 22.71% | 90 | S&P BSE 500 |
9. HDFC Focused Fund
HDFC Focused Fund has a small number of high-quality stocks in its portfolio, added after extensive research. The fund’s primary objectives are to see long-term profits and sustainable companies. Since it is concentrated, performance may change in the short term. The minimum investment amount is INR 100, and the minimum SIP amount is also INR 100. The fund was launched on 17 September 2004. Some of the top holdings include ICICI Bank, HDFC Bank, Axis Bank, and SBI, among others.
| 1-Year Return | 3-Year Return (CAGR) | 5-Year Return (CAGR) | No. of Stocks | Benchmark |
|---|---|---|---|---|
| 10.38% | 21.48% | 24..31% | 33 | S&P BSE 500 |
10. Tata Flexi Cap Fund
The Tata Flexi Cap Fund can invest in large-cap, mid-cap, and small-cap stocks without limitations on how much to invest in each. This lets the manager take advantage of market opportunities. The flexible strategy aims for long-term capital growth while reducing risk by diversifying investments across different assets.
The minimum investment amount is INR 5,000, and the minimum SIP amount is also INR 100. The fund was launched on 6 September 2018. Some of the top holdings include ICICI Bank, HDFC Bank, Reliance, L&T, Axis Bank, etc.
| 1-Year Return | 3-Year Return (CAGR) | 5-Year Return (CAGR) | No. of Stocks | Benchmark |
|---|---|---|---|---|
| 9.23% | 16.94% | 14.28% | 60 | S&P BSE 500 |
Risks Involved in investing in Long-Term Mutual Funds
The risks related to investing in Long-term Mutual Funds are as follows:
- Returns are not guaranteed – Unlike fixed deposits, mutual funds do not give fixed returns. Performance can vary from year to year.
- Higher volatility in mid and small-cap funds – These funds can offer strong long-term returns but may see sharper ups and downs in the short run.
- Changes in fund management – A change in fund manager or strategy can impact how the fund performs for some time.
- Temporary underperformance – Even good funds may underperform the market or peers during certain phases. This is a normal part of long-term investing.
- Emotional decisions by investors – Panic selling during market corrections or frequent switching between funds often hurts returns more than market volatility.
Read Also: Best Thematic Mutual Funds in India
Conclusion
Long-term investing is not about chasing temporary profits or trying to outsmart the markets. It is about being steady, managing your emotions, and being patient with your investments so they have time to grow. If you choose the appropriate mutual funds for your financial goals, wealth creation is certain. Develop a strong financial plan, stay disciplined with your investments, and let the magic of compounding work for you.
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Frequently Asked Questions (FAQs)
Are long-term mutual funds safe?
They carry market risk, but staying invested for long periods helps in reducing volatility and improving returns.
Is SIP better than a lump sum?
SIP is better for investors since it gives them the benefit of rupee cost averaging.
How many mutual funds should I hold for the long term?
For more investors, a few well-chosen funds are enough to stay diversified.
Can I stop my SIP during a market fall?
It is usually suggested to continue your SIPs during market corrections.
What if a fund underperforms for a few years?
Temporary underperformance is normal. Exit only if there is a clear issue with a fund’s strategy or management. It is suggested to consult your financial advisor before making an investment decision.
