With hundreds of options available in the world of mutual funds, investors may rely on recent returns or confusing opinions, which can blur decision-making.
To simplify this, a clear approach is built to make things easier to understand. The best mutual funds to invest in 2026 are identified through a mix of performance consistency, risk management, and alignment with financial goals.
With this perspective in mind, this blog evaluates these schemes based on returns and how well they fit within a portfolio strategy and time horizon.
Best Mutual Funds to Invest in 2026
The following is a set of the best mutual funds to invest in India 2026, as of 7 April 2026, across PSU, infrastructure, and small-cap segments, based on annualised returns on SIP:
SBI PSU Fund
The fund is a thematic equity scheme that invests in public sector undertakings across banking, energy, and industrial sectors, with an aim to capture government-backed growth opportunities.
| AUM | ₹6,545.08 crore |
| Expense ratio | 1.82 |
| Current NAV | ₹33.79 |
| 5-year annualise return: | 22.24% |
Invesco India PSU Equity Fund
The fund manager combines a bottom-up method for stock selection along with allocation driven by sectors. It focuses on public sector companies, aiming to benefit from valuation re-rating and improved efficiency across government-owned enterprises.
| AUM | ₹1,510.76 crore |
| Expense ratio | 2.12 |
| Current NAV | ₹62.95 |
| 5-year annualise return: | 18.71% |
ICICI Prudential Infrastructure Fund
The fund invests in equities of infrastructure-linked sectors such as construction, energy, and transportation, aligning with India’s long-term development initiatives.
| AUM: | ₹8,097.89 crore |
| Expense ratio: | 1.85 |
| Current NAV | ₹183.16 |
| 5-year annualise return: | 16.57% |
Franklin Build India Fund
The fund focuses on construction, infrastructure, and capital goods sectors, aiming to capture long-term growth driven by urbanisation and industrial expansion.
| AUM: | 3,173.61 |
| Expense ratio: | 1.96 |
| Current NAV | ₹137.17 |
| 5-year annualise return: | 16.72% |
Bandhan Small Cap Fund–Direct
The fund invests primarily in small-cap companies, targeting high-growth businesses with strong earnings potential and scalability.
| AUM: | ₹20,474.12 crore |
| Expense ratio: | 0.49 |
| Current NAV | ₹47.10 |
| 5-year annualise return: | 16.71% |
Motilal Oswal BSE Enhanced Value Index Fund–Direct
This is a passive fund that tracks a value-oriented index, focusing on fundamentally strong stocks with attractive valuations.
| AUM: | ₹1,748.84 crore |
| Expense ratio: | 1.06 |
| Current NAV | ₹25.90 |
| 3-year annualise return: | 12.58% |
Why Choose These Mutual Funds
Building on this selection, these funds reflect a mix of sector strength, consistent performance, and long-term investment strategies, which offer investors a balanced approach across market cycles in 2026.
- Consistency: The above-discussed funds show stable performance over time while handling different market phases, which makes them suitable for long-term portfolio building.
- Sector alignment: The investments in the PSU and infrastructure sectors connect these schemes with the economic direction and policy support of the country.
- Risk balance: The mix of themes, government sectors, and small-cap funds allows the investors to balance growth potential with proper diversification.
- Portfolio fit: These funds can complement the existing portfolio allocations, while investors spread their capital further into investments across sectors and market capitalisations.
Conclusion
In conclusion, the mutual funds schemes reflect more than just recent returns. They represent a combination of sector positioning, consistency, and portfolio relevance.
If you are someone who wants to align your investment choices with long-term goals and market direction, then you are better placed to build a stable and growing investment portfolio over time.
FAQs
The classification of the best mutual fund depends on your financial goals, risk tolerance, and investment horizon. Currently, the funds, such as SBI PSU Fund, Invesco India PSU Equity Fund, ICICI Prudential Infrastructure Fund, Franklin Build India Fund, Bandhan Small Cap Fund Direct, and Motilal Oswal BSE Enhanced Value Index Fund Direct, are gaining attention due to current market trends.
The SIP returns vary based on market conditions and fund performance. While some small-cap or thematic funds may deliver high returns of up to 40% during strong cycles, such outcomes are not consistent and should not be expected every year.
Mutual fund returns change over time depending on market cycles and sector performance. Small-cap and thematic funds often deliver higher returns during bullish phases, but they also carry higher risk. Instead of chasing the highest return, consistency and risk-adjusted performance should be considered.
Top-performing mutual funds vary each year based on market conditions. The funds, such as SBI PSU Fund, Invesco India PSU Equity Fund, ICICI Prudential Infrastructure Fund, Franklin Build India Fund, and Bandhan Small Cap Fund Direct, have shown strong performance recently. However, investors should evaluate funds based on long-term consistency, fund management, and alignment with their investment goals rather than short-term rankings.
