'Best Mutual Fund' for SIPs: What Smart Investors Know That Most Don’t

Investment Compass
Aug 6
3 min read

Updated: Aug 13

Looking for the best mutual fund for your SIP in 2025?

You’re not alone — this is one of the most searched investment queries in India today and it seems like a fair question — after all, who doesn’t want to invest in the best? Let’s divide this question in 2 parts:

Which is the Best Fund?

First, which is the best fund? When people search for best fund, it can mean they are searching for fund which has given highest return in last one year, or a funds whose returns have been stable for last 5 years, i.e. they are less volatile or a funds which has less risk but has given higher returns. The definition of BEST can be different for everyone. SO, when definition for BEST cant be same for everyone how can the best fund be same for everyone.

Is there anything such as a Best Fund?

Second, is there anything called as best fund? Most of the website will show you the top funds basis their performance alone. They do that because a lot of investors, especially DIY investors believe in rare view mirror driving. They look at last 1 year return and then invest and hence roughly 50% of the SIP’s are stopped after 1 year. SO, there is no single “best” mutual fund. Not for SIPs. Not for anyone. Not forever.

Though we know that past performance is not a guarantee for future performance but its still helps in analyzing how the fund has done in good market condition and how it has done is bad market conditions etc. It’s not a bad thing to look at past performance, but looking at just last 1 year return and looking ONLY at returns is not an ideal thing to do.

What Markets have to say

Let’s see what were the dominating themes of market in last 5 years:

In 2020–21, large-cap funds dominated.

In 2022, value-oriented and dividend funds took the lead.

In 2023–24, mid- and small-cap funds and thematic funds delivered massive returns — but also saw sharp corrections in 2025.

Mutual funds follow different investment styles. Each of these styles performs differently in different market phases. A small-cap fund might deliver stellar returns in a bull market but crash when the market turns volatile. A large-cap fund might offer stability but underperform during a rally in smaller stocks. Value funds might lag for years before having a sudden burst of outperformance.

So, if one was just following the BEST fund strategy, they would have missed on not only good returns but also on compounding. What works today may underperform tomorrow. Chasing past performance can be a trap.

Search for “top mutual funds for SIP” and you’ll find a different list every year.

That’s because:

Market trends shift
Fund managers change
Economic cycles play out

The “#1 fund” of last year might not even be in the top 10 this year.

The Right Question to ask

Instead of asking “What is the best mutual fund for SIP in India right now?”, one should ask “Which mutual fund mix matches my goals, time horizon, and risk appetite?”

What Seasoned Investors do

Here’s what seasoned investors do:

Choose 4–5 good-quality funds with different investment styles
Invest monthly — no matter what the market is doing
Rebalance the portfolio once a year — not every time a new “best fund” list comes out
Focus on your financial goals, not fund returns

Conclusion

There’s no single best mutual fund for SIP — only the best combination for you. So instead of running after last year’s star performer, create a well-diversified SIP portfolio, stay consistent, and give your investments the time and space to grow.