Synopsis- The high-risk and high-return funds can provide investors with exponential growth. The article exposes the best-performing small-cap, mid-cap, and thematic funds in 2025 with their performance measures, plus the importance of a long investment horizon and risk knowledge.
Key Indicators to Pay Attention to
- Assets Under Management (AUM): AUM reflects the amount of assets the fund has as well as manages. The bigger the AUM, the higher the investor trust and the capability of the fund house might indicate, yet it does not imply future profits.
- Net Asset Value (NAV): The NAV is the unit offered price of the fund. It varies on a day-to-day basis depending on the market value of the underlying assets of the fund. Although NAV is not always indicative of a superior fund, it is possible to determine the level of fund performance through its trend.
- The expense ratio: This is the yearly fee that the mutual fund is paying to the operations and management of funds. When the expense ratio is lower, your returns tend to remain with you.
- Returns (3-year and 5-year annualized): They show the history of the performance of this fund based on long-term and medium-term values, which are used to measure its consistency. But the history is not the predictor of the future.
High-Risk, High-Return Funds in India (Top-Performing funds as of July 2025 data)
1. Invesco India PSU Equity Fund Direct Growth
- Category: Equity Thematic
- AUM (as of July 14, 2025): ₹1438.55 Crores
- NAV (as of July 14, 2025): ₹77.23
- Expense Ratio (as of July 14, 2025): 0.94%
- 3-Year Annualized Return: 39.83%
- 5-Year Annualized Return: 31.37%
This fund aims for long-term capital appreciation by investing predominantly in equity and equity-related instruments of companies where the central/state government has majority shareholding or management control or the power to appoint a majority of directors.
2. Motilal Oswal Midcap Fund Direct Growth
- Category: Mid Cap Equity
- AUM (as of July 14, 2025): ₹33,053.13 Crores
- NAV (as of July 14, 2025): ₹117.34
- Expense Ratio (as of July 14, 2025): 0.68%
- 3-Year Annualized Return: 33.81%
- 5-Year Annualized Return: 37.40%
This fund focuses on quality mid-cap companies with potential for growth and competitive advantages. Its consistent high returns over both 3 and 5 years make it a strong contender in the mid-cap space. Motilal Oswal Mutual has a total AUM of approximately ₹1,10,769 crores.
3. Nippon India Small Cap Fund
- Category: Small Cap Equity
- AUM (as of July 14, 2025): ₹66,601.80 Crores
- NAV (as of July 14, 2025): ₹172.96
- Expense Ratio (as of July 14, 2025): 1.40%
- 3-Year Annualized Return: 30.18%
- 5-Year Annualized Return: 38.74%
This fund aims for long-term capital appreciation by investing predominantly in small-cap companies. It has demonstrated strong performance over both 3 and 5 years, making it a prominent choice in the small-cap segment. Nippon India Mutual Fund itself is a large AMC, with an AUM of approximately ₹4.3 lakh crores.
4. SBI PSU Fund
- Category: Thematic—PSU
- AUM (as of July 14, 2025): ₹5,427.44 Crores
- NAV (as of July 14, 2025): ₹32.14
- Expense Ratio (as of July 14, 2025): 1.87% (for regular plan, direct plan likely lower)
- 3-Year Annualized Return: 38.66%
- 5-Year Annualized Return: 32.59%
This thematic fund invests in public sector undertakings (PSUs). While its 1-year return might show some volatility, its long-term performance over 3 and 5 years has been very strong, reflecting the recent rally in PSU stocks. SBI Mutual Fund is one of the largest AMCs in India, with an AUM of around ₹10,76,364 crores.
Also read: Best Performing Multi-Asset Allocation Funds in 2025 – Is Your Fund on the List?
5. ICICI Prudential Infrastructure Direct Growth
- Category: Sectoral Equity
- AUM (as of July 14, 2025): ₹8,042.75 Crores
- NAV (as of July 14, 2025): ₹215.02
- Expense Ratio (as of July 14, 2025): 1.14%
- 3-Year Annualized Return: 35.94%
- 5-Year Annualized Return: 38.29%
ICICI Prudential Infrastructure Direct—Growth is a well-managed, large AUM sectoral fund offering strong long-term returns—but it carries elevated risk due to its thematic focus and cost structure. Ideal for experienced, risk-tolerant investors looking to capitalize on India’s infrastructure growth over the coming years with a total AUM of 6.71 lakh crores.
6. Quant Small Cap Fund Direct Plan Growth
- Category: Equity
- AUM (as of July 14, 2025): ₹29,629.09 Crores
- NAV (as of July 14, 2025): ₹285.49
- Expense Ratio (as of July 14, 2025): 0.65%
- 3-Year Annualized Return: 31.89%
- 5-Year Annualized Return: 45.01%
Quant Small Cap Fund (Direct – Growth) is a sharply run, high-performing small-cap fund that has given exemplary returns in the long term. Being data-driven and aggressive, it can be an appealing prospect to experienced, risk-tolerant investors interested in small-cap, long-term growth, but only as long as they are prepared to go through the ups and downs of volatility and possible governance issues.
Investor Actionable Insights for Investors
- Balanced: Never keep all your eggs in one basket. Diversify by the types of funds and by sectors equally, even in the high-risk type.
- Long Term: These funds are suitable for investors whose investment horizon is long-term (5 years or more) to withstand market fluctuations and to give the power of compounding a chance to work.
- Systematic Investment Plans (SIPs): By investing through a SIP, you will be spreading your cost of purchasing on a regular basis, which will help to more or less counter the effect of market fluctuations.
- Periodic Check: These are long-term kinds of investments, but a check of the performance of these investments and your portfolio allocation should be done regularly to make sure it suits your financial goals.
- Know Your Risk Tolerance: The higher the returns, the higher the risk. Be truthful about how much you can hold in the way of volatility before you get no sleep.
Conclusion
Mutual funds with high risk and high returns provide the prospect of great wealth building, especially in an expanding economy like that of India. Such funds as Nippon India Small Cap, Motilal Oswal Midcap, Quant Small Cap, SBI PSU Fund, and ICICI Prudential have returned impressive since the past few years. Nevertheless, they are the most volatile in their nature, so they require a long-term outlook and a properly developed investment strategy. Never make an investment decision without first taking into account your personal financial goals and risk tolerance, and they do not actually guarantee future returns through past performance.
Written by Hiten Chauhan
