This Article was fact checked and last updated for accuracy on June 30, 2025 by Mani Karthik
Your roadmap to smart investing in the homeland
Hey folks! Mani here.
Just like my journey back to India in 2017 needed careful planning, picking the right mutual funds requires similar attention.
When I left my Silicon Valley life behind, I had to rethink everything. Including my investments.
My wife was skeptical. “Mani, are Indian mutual funds even worth it?” she asked.
Seven years later, our portfolio has proven her wrong. Big time.
Why Mutual Funds? My Personal Take 💭
Remember when I worked at SuperMoney? I dealt with American investment products daily.
But Indian mutual funds? They’re different beasts entirely.
Here’s why they work for NRIs like us:
- Rupee cost averaging: Your dollars get more rupees when markets dip
- Professional management: Someone else does the heavy lifting
- Tax benefits: ELSS funds save you money come tax season
- Flexibility: Start with ₹500 per month via SIP
My elder son once asked, “Dad, why not just buy individual stocks?”
Smart kid. But here’s the thing.
I’m busy running my business. I don’t have time to track 50 different companies.
Mutual funds let fund managers do that for me.
Top Performing Categories: The Winners 🏆
Based on 2025 data, here are the categories crushing it:
1. Large Cap Funds
Best for: Conservative investors wanting steady growth
Why I like them: Less volatile than small caps. Perfect for my wife’s portfolio.
2. Mid Cap Funds
Best for: Aggressive growth seekers
Why they work: Sweet spot between growth and stability. My personal favorite.
3. Small Cap Funds
Best for: Young investors with high risk appetite
Warning: Only if you can stomach 30-40% swings. Not for the faint hearted.
4. ELSS Funds
Best for: Tax saving with growth potential
Pro tip: Use them to reduce your Indian tax liability.
The Top Performers: Data That Matters 📊
Here are the standout funds based on 3-year and 5-year returns:
| Fund Name | 3-Year Return | 5-Year Return | Risk Level |
|---|---|---|---|
| Motilal Oswal Midcap Fund | 36.53% | 37.81% | Very High |
| Franklin Build India Fund | 35.84% | 34.79% | Very High |
| ICICI Pru BHARAT 22 FOF | 34.31% | 33.35% | High |
| HDFC Mid-Cap Opportunities | 33.18% | 32.88% | Very High |
| Invesco India Smallcap | 33.57% | 35.68% | Very High |
| HDFC Focused Fund | 29.15% | 30.92% | High |
Returns are annualized as of June 2025
Fund Houses I Trust: The Reliable Players 🏦
After 7 years of investing in India, these are my go-to AMCs:
ICICI Prudential
- AUM: ₹6,90,000+ crores
- Why I trust them: Consistent performance, professional management
- My pick: ICICI Pru BHARAT 22 FOF
HDFC Mutual Fund
- Strength: Large cap expertise
- Track record: Decades of consistent returns
- My pick: HDFC Focused Fund
SBI Mutual Fund
- Advantage: Government backing, low costs
- Best for: First-time investors
- My pick: SBI Nifty 50 Index Fund
Motilal Oswal
- Specialty: Mid and small cap funds
- Risk profile: High
- My pick: Motilal Oswal Midcap Fund
SIP Strategy: The Smart Way to Invest 💡
Here’s how I structure our family’s SIP investments:
The 50-30-20 Rule
- 50%: Large cap funds (stability)
- 30%: Mid cap funds (growth)
- 20%: Small cap/sector funds (aggressive growth)
Monthly SIP Allocation
- ₹10,000: If you’re starting out
- ₹25,000: If you want serious wealth creation
- ₹50,000+: If you’re already well-off
My younger son started his SIP with ₹1,000 per month from his pocket money.
Three years later, he’s learned more about money than most adults know.
Key Factors to Consider: Don’t Make My Mistakes ⚠️
When I first moved back, I made some rookie errors. Learn from them:
1. Expense Ratio Matters
- Look for ratios below 1%
- Direct plans are always cheaper
- Every 0.5% saved compounds over time
2. Fund Manager Track Record
- Check their experience
- Look at previous fund performances
- Stability matters more than star power
3. AUM Size
- Too small = liquidity issues
- Too large = limited agility
- Sweet spot: ₹1,000-10,000 crores
4. Consistency Over Star Performance
- One good year doesn’t make a fund
- Look for 3-5 year track records
- Avoid flavor-of-the-month funds
Tax Implications for NRIs: Know the Rules 📋
This is where it gets tricky for folks like us:
For NRIs
- TDS: 20% on gains (with indexation benefit for debt funds held >3 years)
- ELSS funds: 15% TDS, but you can claim refund
- Tax treaty benefits: Check your country’s DTAA with India
For Residents
- Equity funds: 10% tax on gains >₹1 lakh (LTCG)
- Debt funds: Taxed as per income slab
- ELSS: 80C deduction up to ₹1.5 lakh
Investment Platforms: Where to Start 🖥️
Based on my experience, here are the best platforms:
For Beginners
- Groww: User-friendly interface
- 5paisa: Low charges, good research
- INDmoney: Comprehensive tracking
For Advanced Investors
- ICICI Direct: Full-service experience
- Direct AMC websites: Lowest costs
- Zerodha Coin: For DIY investors
Red Flags: Funds to Avoid ⛔
Seven years of investing taught me what NOT to do:
Avoid These Fund Types
- New Fund Offers (NFOs): No track record
- Sectoral funds: Unless you really understand the sector
- Funds with high churning: Indicates confused strategy
- Tiny funds: Below ₹100 crore AUM
Warning Signs
- Fund manager changes frequently
- Expense ratios above 2%
- Consistent underperformance vs benchmark
- Too many scheme modifications
Building Your Portfolio: Step-by-Step Guide 🗺️
Here’s exactly how I’d start if I were beginning today:
Step 1: Emergency Fund First
- Keep 6 months expenses in liquid funds
- Don’t touch this money for investments
Step 2: Start Small
- Begin with ₹5,000 monthly SIP
- Choose 2-3 funds maximum initially
Step 3: Gradually Increase
- Add ₹1,000 every 6 months
- Rebalance annually
Step 4: Stay Disciplined
- Don’t stop SIPs in market downturns
- This is when you buy more units cheaper
Market Outlook 2025: What I’m Watching 👀
The India story remains compelling:
Positive Factors
- GDP growth projections: 6-7%
- Digital transformation accelerating
- Infrastructure spending increasing
- Young demographic dividend
Risks to Watch
- Global recession fears
- Inflation pressures
- Geopolitical tensions
- Overvaluation in some sectors
My Current Portfolio Allocation 📈
Here’s how our family money is allocated:
| Asset Class | Allocation | Rationale |
|---|---|---|
| Large Cap Equity | 35% | Stability and dividends |
| Mid Cap Equity | 25% | Growth potential |
| Small Cap Equity | 15% | High growth bets |
| Debt Funds | 20% | Capital preservation |
| International Equity | 5% | Diversification |
Action Plan: Your Next Steps 🚀
Ready to start? Here’s your roadmap:
This Week
- Open a mutual fund account
- Complete KYC documentation
- Choose your first fund
This Month
- Start your first SIP
- Set up automatic payments
- Begin tracking performance
Next 6 Months
- Add second fund to portfolio
- Increase SIP amounts gradually
- Review and rebalance if needed
Personal Note: Why This Matters 💝
When my father passed away during my college years, our family struggled financially.
My mother had no investment knowledge. She kept everything in fixed deposits.
That experience taught me the importance of growing money, not just saving it.
Today, my wife manages her own portfolio. My sons understand compounding.
We’re building generational wealth. Not just for ourselves, but for our children’s children.
That’s the power of starting early with the right mutual funds.
Bottom Line: Keep It Simple 🎯
Three key takeaways:
- Start now: Time in market beats timing the market
- Stay consistent: SIPs work only if you don’t stop them
- Think long-term: Don’t check your portfolio daily
Remember, investing is a marathon, not a sprint.
Just like my journey back to India took planning and patience, building wealth through mutual funds requires the same approach.
Start small. Stay consistent. Think long-term.
Your future self will thank you.
Ready to begin your investment journey?
Start with one fund. Add ₹5,000 monthly.
In 10 years, you’ll be amazed at what compound interest can do.
Trust me on this one.
Happy investing!
-Mani Karthik
Sources and References 📚
All data and fund performance figures mentioned in this guide are sourced from:
- Advisorkhoj Mutual Fund Research
- INDmoney Best SIP Funds 2025
- Dhan Investment Platform
- 5paisa Mutual Fund Analysis
- Groww Best Equity Mutual Funds
- ICICI Bank Investment Research
Data as of June 27, 2025. Past performance does not guarantee future results. Please consult a financial advisor before making investment decisions.