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The Indian stock market has witnessed sharp corrections recently, with the Nifty 50 falling by more than 15% and mid-cap and small-cap indices seeing deeper corrections of 20–25% or more. While volatility can be unsettling, such corrections often create the best entry points for long-term investors. Many investors wonder whether this is the right time to deploy lump sum money or start a Systematic Investment Plan (SIP).
To explore this further, we asked ChatGPT to share its view on the best mutual funds to invest in 2025. Interestingly, the AI listed five mutual fund schemes that could be worth considering for the coming years. In this article, we will look at these five mutual funds, their performance history, and our perspective on whether they deserve a place in your portfolio.
What Question Was Asked to ChatGPT?
The question posed to the AI was straightforward:
“As an AI, based on the current stock market correction in India, list down the best mutual funds to invest in India in 2025 either through a lump sum now or via SIP for the next few years.”
The AI responded with general advice about how market corrections can present good opportunities for long-term investors, and then it listed five mutual funds across different categories. Let us dive into the details.
5 Best Mutual Funds to Invest in 2025
According to ChatGPT, the following mutual funds stand out:
- Motilal Oswal Midcap Fund
- Invesco India Midcap Fund
- HDFC Balanced Advantage Fund
- ICICI Prudential Infrastructure Fund
- Quant Multi Asset Fund
Let us examine each of these in detail.
Motilal Oswal Midcap Fund
The Motilal Oswal Midcap Fund focuses on mid-cap companies with strong growth potential and solid management.
Performance Overview
- 1-Year Return: 19.3%
- 3-Year Return: 114.2%
- 5-Year Return: 278%
- 10-Year Return: 402.6%
The direct plan has delivered around 23% annualized returns since inception in 2013.
Fund Characteristics
- Current allocation: 18% in mid-caps, 16% in small-caps, zero in large-caps
- Beta: 0.85, indicating lower volatility compared to the benchmark
- Alpha: 7.83, showing strong risk-adjusted returns
- Expense Ratio: 0.65% (Direct Plan)
Our View
This fund has a proven track record of generating wealth and remains one of the top-performing mid-cap funds. It is suitable for investors with a long-term horizon of 7–10 years.
Invesco India Midcap Fund
This fund primarily invests in mid-cap companies but also includes exposure to large-cap and small-cap stocks.
Performance Overview
- 1-Year Return: 18.7%
- 3-Year Return: 81.1%
- 5-Year Return: 218.1%
- 10-Year Return: 371.6%
Annualized returns since inception stand at around 23.3%.
Fund Characteristics
- Allocation: 29% in mid-caps, 22% in small-caps, 6.5% in large-caps
- Beta: 0.88, relatively stable compared to the benchmark
- Alpha: 1.45, decent but lower than peers
- Expense Ratio: 0.59% (Direct Plan)
Our View
This is a consistent mid-cap performer with a balanced approach. Investors seeking diversification within the mid-cap segment can consider this fund.
HDFC Balanced Advantage Fund
The HDFC Balanced Advantage Fund is a dynamic asset allocation scheme that shifts between equity and debt based on market conditions.
Performance Overview
- 1-Year Return: 7.4%
- 3-Year Return: 72.8%
- 5-Year Return: 199.9%
- 10-Year Return: 276%
Annualized returns since inception hover around 14.8%.
Fund Characteristics
- Allocation: 65% equity, 31% debt, rest in other instruments
- Equity split: 44% in large-caps, 5% in mid-caps, 4% in small-caps
- Beta: 1.22, higher volatility
- Alpha: 7.35, strong risk-adjusted returns
- Expense Ratio: 0.78% (Direct Plan)
Our View
This fund works well for conservative investors who want equity exposure but with a cushion of debt. It is ideal for balancing risk during market corrections.
ICICI Prudential Infrastructure Fund
As the name suggests, this is a thematic fund that invests primarily in companies related to infrastructure.
Performance Overview
- 1-Year Return: 7.6%
- 3-Year Return: 111.2%
- 5-Year Return: 346.9%
- 10-Year Return: 315.4%
Annualized returns since inception stand around 16.5%.
Fund Characteristics
- Equity allocation: 49% in large-caps, 7% in mid-caps, 16% in small-caps
- Beta: 0.92, relatively moderate volatility
- Alpha: 14.3, very strong outperformance compared to benchmark
- Expense Ratio: 0.78% (Direct Plan)
Our View
Infrastructure is a key sector for India’s growth story, and this fund has captured that theme well. However, investors should be cautious as thematic funds carry higher concentration risk.
Quant Multi Asset Fund
This fund invests across equity, debt, and commodities, making it a true multi-asset product.
Performance Overview
- 1-Year Return: 10.6%
- 3-Year Return: 72.8%
- 5-Year Return: 291%
- 10-Year Return: 378%
Annualized returns since inception are around 15%.
Fund Characteristics
- Allocation: 56% in equity, 11% in debt, balance in commodities and other assets
- Beta: 0.45, low volatility compared to the benchmark
- Alpha: 10.9, excellent risk-adjusted returns
- Expense Ratio: 0.61% (Direct Plan)
Our View
Quant AMC has delivered impressive numbers, but recent regulatory issues have affected investor confidence. Investors should weigh the risks before committing large sums here.
Does ChatGPT’s List Miss Anything?
One noticeable gap is the absence of large-cap or flexi-cap funds. While mid-cap and thematic funds can deliver higher returns, they are also more volatile. For a well-rounded portfolio, adding one or two large-cap or flexi-cap funds would improve stability.
Conclusion
The five mutual funds listed by ChatGPT for 2025 cover a mix of mid-cap, hybrid, thematic, and multi-asset categories. Each fund has its own strengths, but investors should align choices with their risk tolerance, financial goals, and time horizon.
- Mid-cap funds like Motilal Oswal and Invesco India offer high growth but with higher risk.
- HDFC Balanced Advantage is suitable for risk-averse investors.
- ICICI Infrastructure plays on India’s growth story.
- Quant Multi Asset provides diversification across asset classes.
While AI can highlight strong funds based on past performance, investors must conduct their own due diligence, monitor fund performance regularly, and maintain a diversified portfolio to achieve long-term financial goals.