0
0
As the month of August has just begun, interested investors are already on the lookout for potential Mutual Funds for investment. Many first-time or less-experienced investors often seek recommendations for the best mutual funds to invest in. They typically turn to friends, colleagues, or online forums to find top-performing schemes when beginning their investment journey or planning to invest additional funds. However, in most cases, the suggestions they receive, whether from peers or the internet, don’t fully meet their expectations for various reasons.
In this blog, we present a comprehensive overview of the best mutual funds to invest in August 2025 in India. Our selection covers five major equity mutual fund categories—aggressive hybrid, large cap, mid cap, small cap, and flexi cap. For each, we highlight past performance, along with key advantages and disadvantages to help investors make informed decisions.
What are Aggressive Hybrid Mutual Funds?
Aggressive Hybrid Mutual Funds are mutual fund schemes that invest in a mix of equity and debt instruments, with a greater emphasis on equities. Their objective is to generate capital growth through equity investments while maintaining some level of portfolio stability with debt holdings.
Features of Aggressive Hybrid Mutual Funds:
- Equity Allocation: Typically, 65% to 80% of the portfolio is invested in stocks and related instruments, offering strong growth potential.
- Debt Allocation: About 20% to 35% is invested in fixed-income securities like government bonds and corporate debt, providing a cushion against market volatility.
- Risk Profile: These funds are moderately to highly risky, making them ideal for investors aiming for higher returns than debt funds, but with relatively lower risk than pure equity funds.
- Taxation: With equity exposure above 65%, they qualify for equity taxation—long-term capital gains (LTCG) are taxed at 10% if gains exceed ₹1 lakh after one year.
What are Large Cap Mutual Funds?
Large Cap Mutual Funds are a category of equity funds that focus on investing in shares of well-established, financially strong companies with a proven track record. These companies usually rank among the top 100 listed firms in India by market capitalization.
Features of Large Cap Mutual Funds:
- Stable Investment Option: These funds allocate at least 80% of their portfolio to large-cap stocks, known for strong fundamentals and consistent earnings, offering a relatively stable investment avenue.
- Lower Market Fluctuations: Compared to mid and small-cap funds, large cap funds tend to be less volatile, making them a good choice for conservative investors or those with a long-term view.
- Consistent Growth Potential: While they may not match the high returns of small-cap funds, large caps offer steady and sustainable growth, ideal for building wealth gradually.
- High Liquidity: Shares of large-cap companies are widely traded, enabling fund managers to buy or sell easily without impacting the market significantly.
- Long-Term Investment Suitability: These funds are particularly suitable for investors with long-term financial goals who prefer moderate risk with predictable performance.
- Taxation: As with all equity funds, gains held for over one year are taxed at 10% if they exceed ₹1 lakh in a financial year.
What are Mid-cap Mutual Funds?
Mid Cap Mutual Funds are equity-oriented funds that primarily invest in mid-sized companies—typically those ranked between 101st and 250th in terms of market capitalization in India. These funds aim to tap into the growth opportunities of businesses that are more mature than small caps but still have significant expansion potential.
Features of Mid Cap Mutual Funds:
- Investment Strategy: A minimum of 65% of the fund’s portfolio is allocated to mid cap stocks.
- High Growth Scope: Mid-sized companies often operate in dynamic or fast-growing sectors, offering greater growth potential compared to large caps.
- Risk Profile: These funds carry moderate to high risk—more volatile than large caps, but generally more stable than small caps.
- Long-Term Wealth Builder: Suitable for investors looking for substantial capital growth and who are comfortable with short-term market ups and downs.
- Recommended Duration: Ideal for medium- to long-term investment horizons, typically five years or more.
- Tax Implications: Gains from investments held over a year are classified as long-term capital gains (LTCG) and are taxed at 10% if they exceed ₹1 lakh in a financial year.
What are Small Cap Mutual Funds?
Small Cap Mutual Funds are equity-focused funds that primarily invest in smaller companies, generally ranked 251st and below based on market capitalization in India. These businesses are often in their early growth stages and offer substantial return potential over the long term.
Features of Small Cap Mutual Funds:
- Investment Strategy: At least 65% of the fund’s assets are invested in small cap stocks.
- Strong Growth Opportunities: Small cap companies are often under-researched or undervalued, offering fund managers the chance to benefit from early-stage expansion.
- High Risk & Volatility: These funds are more susceptible to market fluctuations, making them riskier compared to large and mid cap funds.
- Long-Term Investment Horizon: Best suited for investors with a high-risk appetite and a long-term view, typically seven years or more.
- Liquidity Concerns: Lower trading volumes in small cap stocks can lead to liquidity issues, especially during volatile market phases.
- Taxation: Like other equity funds, long-term capital gains (LTCG) are taxed at 10% if profits exceed ₹1 lakh in a financial year and are held for over one year.
What are Flexi Cap Mutual Funds?
Flexi Cap Mutual Funds are equity mutual funds that invest across the full spectrum of market capitalizations—large cap, mid cap, and small cap—without any fixed allocation requirement. This flexible investment approach allows fund managers to adjust the portfolio based on prevailing market conditions and emerging opportunities.
Features of Flexi Cap Mutual Funds:
- Broad Market Coverage: These funds invest in companies of all sizes, combining the stability of large caps with the growth potential of mid and small caps.
- No Allocation Constraints: SEBI does not impose allocation limits across market segments on Flexi Cap funds, allowing fund managers full discretion—unlike category-specific funds.
- Dynamic Portfolio Management: Fund managers can actively reallocate assets in response to market movements, economic trends, or valuation changes, enhancing potential returns.
- Moderate to High Risk: The risk level depends on the fund’s exposure to mid and small caps, generally ranging from moderate to high.
- Tax Treatment: The government taxes long-term capital gains (LTCG) over ₹1 lakh (after one year) at 10% and short-term gains at 15%, similar to other equity mutual funds.
Top 10 Mutual Funds to Invest in August 2025 in India
1. Canara Robeco Blue Chip Equity Fund
History
Launched on: August 20, 2010
Canara Robeco Mutual Fund offers the Canara Robeco Blue Chip Equity Fund, a large-cap mutual fund from one of India’s most reputable and longstanding asset management companies. This fund aims to provide investors with exposure to stable, financially sound companies, primarily among the top 100 listed by market capitalization.
Fund Overview
- Category: Large Cap Equity Fund
- Investment Objective: To achieve long-term capital growth by primarily investing in large cap stocks.
- Asset Allocation: The fund managers allocate a minimum of 80% of the portfolio to large-cap companies, and invest the remainder optionally in other equities, debt instruments, or REITs/InvITs.
- Fund Managers: Actively managed by seasoned professionals such as Shridatta Bhandwaldar and Vishal Mishra.
- Performance Track Record: The fund has demonstrated consistent long-term performance with relatively lower volatility, making it a suitable option for investors with a conservative approach to equity investing.
2. Mirae Asset Large Cap Fund
History
Launched on: April 4, 2008 (initially introduced as Mirae Asset India Equity Fund)
The fund was renamed Mirae Asset Large Cap Fund in 2018 following SEBI’s re-categorization guidelines, positioning it within the large cap equity segment. It is managed by Mirae Asset Mutual Fund, a reputed asset management company recognized for its consistent performance and investor-centric approach.
Fund Overview
- Category: Large Cap Equity Fund
- Primary Investment: Focuses on investing in the top 100 listed companies in India based on market capitalization.
- Objective: Seeks to deliver long-term capital growth by investing in financially sound, stable, and growth-oriented large-cap businesses.
- Investment Strategy: Utilizes a blend of top-down economic analysis and bottom-up stock selection, with limited exposure to mid-cap stocks to enhance return potential.
- Ideal For: Investors with a moderate to high risk tolerance looking to invest for at least five years or longer.
3. Parag Parikh Flexi Cap Fund
History
Launch Date: May 24–28, 2013 (originally launched as Parag Parikh Long Term Equity Fund)
Fund House: PPFAS Mutual Fund
In 2020, following SEBI’s scheme reclassification, the fund house transitioned the fund to the Flexi Cap category, granting it broader flexibility to invest across market capitalizations while maintaining its global equity exposure.
Fund Overview
- Category: Open-ended Flexi Cap Equity Fund
- Investment Objective: Aims to generate long-term capital appreciation through a diversified portfolio comprising Indian and overseas equities, with the option to allocate to debt instruments when needed.
- Benchmark: NIFTY 500 Total Return Index (TRI)
4. HDFC Flexi Cap fund
History
Launch Date: January 1, 1995
Originally introduced as one of HDFC AMC’s earliest equity offerings, this scheme has grown to become one of India’s longest-running mutual funds. By January 1, 2025, it will mark an impressive 30 years of operation, earning a legacy status in the Indian mutual fund space.Top of Form
Fund Overview
- Fund Type: Open-ended Flexi Cap Equity Fund that dynamically invests across large, mid, and small-cap segments.
- Investment Philosophy: Adopts a bottom-up approach, selecting high-quality businesses at reasonable valuations. This strategy is supported by strong internal research and disciplined risk controls.
- Portfolio Tilt: Maintains a dominant allocation (~80%) in large-cap stocks, with selective positions in mid and small caps based on market opportunities.
5. Axis Midcap Fund
History
Launch Date: February 18, 2011
Axis Mutual Fund introduced the fund through a New Fund Offer (NFO) between February 1–14, 2011, making it one of its early mid-cap offerings.
Objective: The fund aims to deliver long-term capital appreciation by primarily investing in mid-cap equities. It maintains a preference for relatively larger mid-cap companies while also allowing up to 20% exposure to large-cap or debt instruments for diversification and stability.
Fund Overview
- Mid-Cap Focus: Maintains 65%–80% or more exposure to mid-cap stocks, with a bias toward well-established names in the mid-cap universe.
- Flexibility: May allocate a small portion to large-cap or small-cap stocks and up to 20% to debt instruments when needed.
- Stock Selection: Follows a bottom-up approach, focusing on fundamentals and long-term business prospects.
- Portfolio Size: Typically holds a concentrated portfolio of 35–50 stocks, with a cap of around 5% per stock to manage concentration risk.
- Cash Management: Often keeps a prudent cash buffer, reflecting a cautious approach even within the mid-cap space.
6. Kotak Emerging Equity Fund
History
Launch Date: March 30, 2007 (initially launched as Kotak Emerging Equity Scheme)
This fund represents Kotak AMC’s flagship mid-cap offering, focused on identifying promising opportunities in India’s mid-sized companies. Over the years, while it has seen changes in fund management, it has consistently remained true to its mid-cap investment mandate.
Fund Overview
- Category: Equity – Mid Cap
- Benchmark: Nifty Midcap 150 Total Return Index (TRI)
- Investment Objective: To generate long-term capital growth by investing largely in equity and equity-related instruments of mid and small-cap companies, with occasional flexibility to allocate a portion to debt or hold cash.
- Stock Selection Process: Follows a Business–Management–Valuation (BMV) framework to identify quality mid-cap stocks that are fundamentally strong and reasonably priced.
7. Axis Small Cap Fund
History
Launch Date: November 29, 2013
Axis Mutual Fund launched the Axis Small Cap Fund as an open-ended equity scheme specifically targeting the small-cap segment of the market. Axis Bank, in partnership with global investment manager Schroders, established the fund house in 2009.
Fund Overview
- Category: Equity – Small Cap Fund
- SEBI Mandate: Requires a minimum 65% allocation to small-cap stocks at all times.
- Investment Objective: To create long-term wealth by investing in a diversified portfolio of fundamentally strong small-cap companies.
- Stock Selection Approach: Employs a bottom-up investment style, identifying value-driven small caps with sound financials and strong future growth prospects. Maintains a low portfolio turnover ratio (~35%), which is significantly lower than the category average (~125%), reflecting a buy-and-hold strategy and a focus on long-term conviction-based picks.
8. SBI Small Cap Fund
History
Launch Date: September 9, 2009
This scheme, offered by SBI Mutual Fund, falls under the Equity – Small Cap category. It has established itself as one of the leading funds in the small-cap space over the years.
Fund House: SBI Funds Management Pvt. Ltd. manages the fund as a joint venture between the State Bank of India (63%) and global asset manager Amundi (37%), combining local expertise with international fund management standards.
Fund Overview
- Core Mandate: The fund maintains a minimum allocation of 65% to small-cap stocks, while also allowing some exposure to mid-cap companies and holding limited positions in debt or cash instruments.
- Investment Goal: Aims to deliver long-term capital growth through a diversified portfolio of promising small- and mid-cap stocks.
- Benchmark Index: Tracks the S&P BSE 250 SmallCap Total Return Index as its primary performance benchmark.
9. SBI Equity Hybrid Fund
History
Launch Date: SBI Mutual Fund originally launched the scheme in 1995 (though some reports mention January 1996) as SBI Magnum Balanced Fund and later rebranded it as SBI Equity Hybrid Fund to reflect its investment strategy more accurately.
The scheme is managed by SBI Mutual Fund, a well-established asset management company founded in 1987 as a joint venture between State Bank of India and Amundi, one of Europe’s leading asset managers.
Fund Overview
Fund Category: SEBI classifies the scheme as an Aggressive Hybrid Fund (also known as H-35:65 Aggressive Hybrid) and requires it to allocate 65–80% of its assets to equities and 20–35% to debt and fixed-income instruments.
Objective: Aims to deliver long-term capital growth while managing volatility by combining the potential of equity investments with the stability of debt instruments.
10. Mirae Asset Hybrid Equity Fund
History
Launch Date: Mirae Asset launched the fund as Mirae Asset Prudence Fund on July 29, 2015. It was later reclassified as a hybrid equity fund in accordance with SEBI’s fund categorization guidelines.
Fund House: Mirae Asset Global Investments (India) Pvt. Ltd, a prominent asset management company and part of the globally recognized Mirae Asset Financial Group, manages the scheme.
Fund Overview
- Category: This is an Aggressive Hybrid Fund, with a regulatory mandate to allocate 65%–80% to equities and 20%–35% to debt or money market instruments.
- Equity Allocation: Around 70%–75% of the portfolio is in equities, primarily large-cap stocks, complemented by selective exposure (around 9%) to mid- and small-cap companies.
- Debt Strategy: The fund managers deploy the fixed-income portion in high-quality instruments, including government securities and AAA-rated corporate bonds, and actively manage duration to navigate interest rate cycles.
- Investment Philosophy: The fund uses a combination of top-down macroeconomic analysis and bottom-up stock picking, with a strong focus on valuation, quality, and risk control.
Final thoughts
For August 2025, a diversified mix of large-cap, flexi-cap, mid/small-cap, and international mutual funds offers the potential for solid risk-adjusted returns. Investors should select schemes that match their investment horizon, risk appetite, and financial objectives, while prioritizing consistent performers and factor-aligned strategies..
