Indian equity markets have shown remarkable resilience over the last few years, supported by strong domestic participation, improving corporate earnings, and India’s long-term growth story. With 2026 approaching, investors are once again searching for the best mutual funds that can deliver consistent wealth creation across market cycles. This time, instead of using Grok AI, ChatGPT, or Gemini, I explored Perplexity AI to understand which mutual funds it considers best positioned for 2026. The objective was simple – identify high-quality, proven mutual fund schemes across major categories that have demonstrated strong performance, consistency, and long-term potential. In thi sarticle we would explore 11 Best Mutual Funds to invest in 2026 in India as per Perplexity AI.
Earlier we explored about 8 Best Mutual Funds to Invest in 2026 as per ChatGPT.
What Question Was Asked to Perplexity AI?
Here is the exact question asked:
“We are at the end of 2025 and Nifty is at 26,000 (peak level). As per you which are the Best Mutual Funds to invest in 2026 in India. Please provide just names of 2 mutual funds each category like largecap, midcap, smallcap, flexicap, global funds and sector/thematic.”
Based on this query, Perplexity AI shortlisted 12 mutual fund schemes covering diversified categories. However there was 1 duplicate, hence there are 11 mutual fnds recommended by Perplexity AI. Here is the video link of my question and its response.
List of 11 Best Mutual Funds to Invest in 2026 (As per Perplexity AI)
Below is the summary list along with 5-year CAGR performance.
| S No | Category | Mutual Fund Name | 5 Yrs CAGR |
|---|---|---|---|
| 1 | Large Cap | Nippon India Large Cap Fund | 21.9% |
| 2 | Large Cap | ICICI Prudential Large Cap Fund | 19.4% |
| 3 | Mid Cap | Motilal Oswal Midcap Fund | 30.1% |
| 4 | Mid Cap | Invesco India Midcap Fund | 26.7% |
| 5 | Small Cap | Nippon India Small Cap Fund | 29.0% |
| 6 | Small Cap | Quant Small Cap Fund | 31.2% |
| 7 | Flexi Cap | Parag Parikh Flexi Cap Fund | 21.2% |
| 8 | Flexi Cap | HDFC Flexi Cap Fund | 24.9% |
| 9 | Global Fund | Motilal Oswal Nasdaq 100 FoF | 20.6% |
| 10 | Sector/Thematic | ICICI Prudential Infrastructure Fund | 31.2% |
| 11 | Sector/Thematic | Kotak PSU Bank ETF | 35.5% |
Deep Dive: Best Mutual Funds to Invest in 2026 as per Perplexity AI
Below is a detailed look at each shortlisted mutual fund, including investment objective, performance, suitability, and key risks.
1) Nippon India Large Cap Fund
Fund Objective
Aims to generate long-term capital appreciation by investing predominantly in large-cap companies with strong balance sheets and established market leadership.
CAGR Performance
- 3-Year CAGR: 19.4%
- 5-Year CAGR: 21.9%
- 10-Year CAGR: 16.4%
Who Should Invest
- Investors seeking relatively stable equity exposure
- Suitable for moderate-risk investors with long-term goals
Risk Factors
- Limited upside during sharp midcap-led rallies
- Short-term underperformance during value rotation phases
This fund is also part of 10 Best Mutual Funds to invest in 2026 as per Google Gemin AI too.
2) ICICI Prudential Large Cap Fund
Fund Objective
Focuses on investing in fundamentally strong bluechip companies with consistent earnings visibility.
CAGR Performance
- 3-Year CAGR: 18.2%
- 5-Year CAGR: 19.4%
- 10-Year CAGR: 16.2%
Who Should Invest
- Conservative to moderate equity investors
- Investors building a core portfolio allocation
Risk Factors
- Lower alpha generation compared to aggressive categories
- Large-cap valuation risks in overheated markets
3) Motilal Oswal Midcap Fund
Fund Objective
Invests in high-quality mid-sized companies with scalable business models and long-term growth potential.
CAGR Performance
- 3-Year CAGR: 25.1%
- 5-Year CAGR: 30.1%
- 10-Year CAGR: 19.3%
Who Should Invest
- Investors with high risk appetite
- Minimum investment horizon of 5–7 years
Risk Factors
- High volatility during market corrections
- Short-term drawdowns can be steep
This is one of the Best Midcap Mutual Funds in terms of Rolling Returns.
4) Invesco India Midcap Fund
Fund Objective
Targets quality midcap businesses that can evolve into future large-cap leaders.
CAGR Performance
- 3-Year CAGR: 27.9%
- 5-Year CAGR: 26.7%
- 10-Year CAGR: 20.5%
Who Should Invest
- Growth-oriented investors
- Those comfortable with moderate-to-high volatility
Risk Factors
- Liquidity risk during stressed market conditions
- Midcap valuation cycles can impact returns
5) Nippon India Small Cap Fund
Fund Objective
Seeks long-term capital appreciation by investing in emerging small-cap companies.
CAGR Performance
- 3-Year CAGR: 21.1%
- 5-Year CAGR: 29.0%
- 10-Year CAGR: 21.3%
Who Should Invest
- Long-term investors with strong risk tolerance
- Investment horizon of 7 years or more
Risk Factors
- Sharp NAV swings during market corrections
- Liquidity risks in small-cap segments
We explored this fund as part of 5 Best Mutual Funds for 2026 as per Microsoft Co-Pilot.
6) Quant Small Cap Fund
Fund Objective
Follows a dynamic, data-driven strategy focusing on momentum and market cycles.
CAGR Performance
- 3-Year CAGR: 21.1%
- 5-Year CAGR: 31.2%
- 10-Year CAGR: 20.0%
Who Should Invest
- Aggressive investors comfortable with volatility
- Those seeking high alpha potential
Risk Factors
- High portfolio churn
- Significant drawdowns during bear markets
Quant mutual funds performance has fallen couple of years back when the scam broke out where its fund manager was involved in front running case.
7) Parag Parikh Flexi Cap Fund
Fund Objective
Offers diversification across Indian equities, overseas stocks, and value-oriented opportunities.
CAGR Performance
- 3-Year CAGR: 22.1%
- 5-Year CAGR: 21.2%
- 10-Year CAGR: 18.5%
Who Should Invest
- Investors seeking global diversification
- Long-term wealth creators with moderate risk profile
Risk Factors
- Currency fluctuation risk
- Overseas market dependency
8) HDFC Flexi Cap Fund
Fund Objective
Dynamically allocates across large, mid, and small-cap stocks based on market conditions.
CAGR Performance
- 3-Year CAGR: 21.6%
- 5-Year CAGR: 24.9%
- 10-Year CAGR: 17.8%
Who Should Invest
- Investors seeking balanced growth
- Suitable as a core diversified equity fund
Risk Factors
- Allocation shifts may affect short-term returns
We analysed this fund earlier at 12 Best Mutual Funds for 2026 as per Grok AI.
9) Motilal Oswal Nasdaq 100 FoF
Fund Objective
Provides exposure to top global technology and innovation-led companies through the Nasdaq 100 index.
CAGR Performance
- 3-Year CAGR: 34.8%
- 5-Year CAGR: 20.6%
- 10-Year CAGR: NA
Who Should Invest
- Investors seeking global diversification
- Exposure to U.S. technology leaders
Risk Factors
- Currency risk
- U.S. market volatility
10) ICICI Prudential Infrastructure Fund
Fund Objective
Invests in infrastructure, capital goods, engineering, and construction-related companies.
CAGR Performance
- 3-Year CAGR: 24.7%
- 5-Year CAGR: 31.2%
- 10-Year CAGR: 18.5%
Who Should Invest
- Investors bullish on India’s infrastructure growth
- Those comfortable with cyclical sectors
Risk Factors
- Policy delays
- Economic cycle dependency
We recently reviewed this fund as part of 14 High Return Mutual Funds with Over 30% CAGR in the Last 5 Years.
11) Kotak PSU Bank ETF
Fund Objective
Tracks PSU banking stocks benefiting from improving asset quality and sector reforms.
CAGR Performance
- 3-Year CAGR: 23.8%
- 5-Year CAGR: 35.5%
- 10-Year CAGR: 6.6%
Who Should Invest
- Tactical investors with sector exposure strategy
- High-risk, high-reward seekers
Risk Factors
- High sector concentration
- Government policy impact
Should You Trust Perplexity AI for Mutual Fund Selection?
AI tools like Perplexity AI are helpful for:
- Identifying consistent performers
- Reducing information overload
- Shortlisting funds across categories
However:
- AI cannot assess personal risk appetite
- It cannot predict future market conditions
- Portfolio suitability still requires human judgement
Always validate fund data using AMFI, fund factsheets, and trusted research platforms before investing.
Conclusion
The 11 mutual funds shortlisted by Perplexity AI for 2026 offer a well-diversified mix across large caps, mid caps, small caps, flexi caps, global exposure, and thematic opportunities. Together, they provide a solid framework for investors planning long-term wealth creation.
That said, mutual fund investing should always align with your personal financial goals, risk tolerance, and investment horizon. Use this list as a research foundation—not as a one-size-fits-all solution.
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