Indian stock markets have continued their strong momentum in the last few years with Nifty 50 now hovering around the 26,000 mark. With rising participation from retail investors and global interest in India, many are now searching for the best-performing mutual funds to invest in 2026. This time, instead of using ChatGPT, I wanted to test Grok AI, a powerful AI model from xAI, to check which mutual funds it recommends for medium to long-term wealth creation. I asked Grok to provide two mutual fund schemes from each major category—large cap, mid cap, small cap, flexi cap, global funds, and thematic/sector funds.
Last year too we asked X Grok AI similar question which it responded with 10 Best Mutual Funds to invest in 2025 as per Grok AI.
What did I ask X Grok AI?
Here is the question I asked Grok:
“Nifty50 is hovering around 26,000 now. Considering this, which are the best mutual funds to invest in India in 2026? Please provide 2 mutual fund scheme names from each category like largecap, midcap, smallcap, flexicap, global funds and thematic/sector funds. I just need list of mutual fund schemes.”
Grok AI responded with 12 high-potential mutual fund schemes across 6 categories.
List of 12 Best Mutual Funds to Invest in 2026 as per Grok AI
Below are the 12 mutual funds Grok AI shortlisted across different categories:
Large Cap Funds
- Nippon India Large Cap Fund
- ICICI Prudential Bluechip Fund (now name changed to ICICI Pru Largecap Fund)
Mid Cap Funds
- Motilal Oswal Midcap Fund
- Invesco India Mid Cap Fund
Small Cap Funds
- Nippon India Small Cap Fund
- Quant Small Cap Fund
Flexi Cap Funds
- Parag Parikh Flexi Cap Fund
- HDFC Flexi Cap Fund
Global Funds
- Motilal Oswal Nasdaq 100 FoF
- Franklin India Feeder – Franklin U.S. Opportunities Fund
Thematic / Sector Funds
- SBI PSU Fund
- ICICI Prudential Infrastructure Fund
Deep Dive Into the Best Mutual Funds to Invest in 2026 as per Grok AI
Below is the detailed analysis, fund objective, performance, risks, and suitability of each recommended scheme.
1) Nippon India Large Cap Fund
Fund Objective:
Aims to generate long-term capital appreciation by investing in established large-cap companies with strong fundamentals.
CAGR Performance:
- 3-Year: : 19.3%
- 5-Year: : 22.4%
- 10-Year: : 16.0%
Who Can Invest:
Ideal for investors seeking stability and lower volatility compared to mid and small caps.
Risk Factors:
- Market volatility can impact returns in the short term.
- Large caps may underperform midcaps during high bull phases.
This fund is also ChatGPT favorite fund which we discussed at 8 Best Mutual Funds to Invest in 2026 (As per ChatGPT).
2) ICICI Prudential Large Cap Fund
Fund Objective:
Focuses on investing in high-quality, fundamentally strong bluechip companies.
CAGR Performance:
- 3-Year: : 18.0%
- 5-Year: : 19.9%
- 10-Year: : 16.0%
Who Can Invest:
Suitable for conservative to moderate risk takers wanting consistent equity exposure.
Risk Factors:
- Lower upside potential during aggressive bull markets.
- Category concentration may limit extraordinary gains.
3) Motilal Oswal Midcap Fund
Fund Objective:
Targets mid-sized companies with strong growth potential and scalable business models.
CAGR Performance:
- 3-Year: : 25.9%
- 5-Year: : 30.7%
- 10-Year: : 19.2%
Who Can Invest:
Best for investors with a 5–7 year investment horizon and higher risk appetite.
Risk Factors:
- Midcap volatility.
- Temporary drawdowns during broader market corrections.
4) Invesco India Mid Cap Fund
Fund Objective:
Invests in quality midcap companies that have the potential to become future large caps.
CAGR Performance:
- 3-Year: : 22.5%
- 5-Year: : 26.7%
- 10-Year: : 20.2%
Who Can Invest:
Ideal for those aiming for high growth with manageable midcap risk.
Risk Factors:
- Higher volatility than large caps.
- Liquidity risk in certain market phases.
This fund is one of the 5 Best Midcap Mutual Funds to Invest in 2025 based on Rolling Returns.
5) Nippon India Small Cap Fund
Fund Objective:
Seeks to generate long-term capital appreciation by investing in emerging small cap companies.
CAGR Performance:
- 3-Year: : 20.8%
- 5-Year: : 29.2%
- 10-Year: : 20.9%
Who Can Invest:
Best suited for long-term investors (7+ years) who can tolerate high volatility.
Risk Factors:
- Sharp downside risk during market corrections.
- Liquidity challenges in small-cap stocks.
6) Quant Small Cap Fund
Fund Objective:
Follows a high-conviction strategy driven by dynamic and momentum-based models.
CAGR Performance:
- 3-Year: : 21.5%
- 5-Year: : 31.7%
- 10-Year: : 20.0%
Who Can Invest:
Investors comfortable with aggressive investment styles and sharp NAV movements.
Risk Factors:
- Highly volatile due to fast-moving quant-driven strategy.
- Potential for drawdowns during bear markets.
We featured this fund earlier at 14 High Return Mutual Funds with Over 30% CAGR in the Last 5 Years.
7) Parag Parikh Flexi Cap Fund
Fund Objective:
Provides diversified exposure across Indian equities, foreign equities, and value-driven stocks.
CAGR Performance:
- 3-Year: : 21.5%
- 5-Year: : 21.4%
- 10-Year: : 18.3%
Who Can Invest:
Suitable for long-term investors wanting diversification including global exposure.
Risk Factors:
- Currency fluctuations.
- Overseas market dependence.
This fund is also Microsoft Copilot AI Favorite Mutual Fund to invest in 2026.
8) HDFC Flexi Cap Fund
Fund Objective:
Invests dynamically across market caps to capture opportunities based on market conditions.
CAGR Performance:
- 3-Year: : 21.5%
- 5-Year: : 25.7%
- 10-Year: : 17.5%
Who Can Invest:
Best for investors wanting a balanced growth approach across large, mid, and small caps.
Risk Factors:
- Allocation changes may impact short-term performance.
9) Motilal Oswal Nasdaq 100 FoF
Fund Objective:
Provides exposure to the Nasdaq 100 index, featuring global technology leaders.
CAGR Performance:
- 3-Year: : 34.3%
- 5-Year: : 20.3%
- 10-Year: : NA
Who Can Invest:
Investors seeking global diversification and exposure to technology-driven companies.
Risk Factors:
- Currency risk.
- U.S. market volatility.
This global fund is Google Gemini AI Favorite Mutual Fund for 2026 too.
10) Franklin U.S. Opportunities Equity Active Fund
Fund Objective:
Invests in U.S. companies with high growth potential, especially in technology and innovation-driven sectors.
CAGR Performance:
- 3-Year: : 25.2%
- 5-Year: : 11.7%
- 10-Year: : 15.3%
Who Can Invest:
Best for investors aiming to diversify globally with exposure to high-growth U.S. companies.
Risk Factors:
- Currency volatility.
- U.S. policy and economic risks.
11) SBI PSU Fund
Fund Objective:
Targets companies in the public sector undertaking (PSU) space across banking, energy, and infrastructure.
CAGR Performance:
- 3-Year: : 27.8%
- 5-Year: : 30.5%
- 10-Year: : 15.2%
Who Can Invest:
Investors comfortable with sector-based investing and higher cyclical risks.
Risk Factors:
- Government-policy driven volatility.
- Sector concentration risk.
This fund is among 7 Thematic Mutual Funds with 30%+ CAGR in 5 Years.
12) ICICI Prudential Infrastructure Fund
Fund Objective:
Focuses on companies in the infrastructure, construction, engineering, and capital goods sectors.
CAGR Performance:
- 3-Year: : 25.2%
- 5-Year: : 32.0%
- 10-Year: : 18.2%
Who Can Invest:
Investors wanting targeted exposure to India’s infrastructure growth story.
Risk Factors:
- Cyclical downturns.
- Policy delays impacting infrastructure development.
Video Link
Our question and Grok AI response is recorded int his video link.
Should We Trust Grok AI for Investment Recommendations?
AI tools like Grok AI are extremely useful for:
- Quick filtering of top funds
- Analysing long-term performance trends
- Highlighting consistent performers
- Removing human biases in selection
However, they also have limitations:
- They cannot predict future returns
- They cannot assess your personal risk profile
- Market conditions can change rapidly
Use Grok AI as a research assistant, not as a final decision-maker. Always validate data using AMFI, Morningstar, Value Research and fund factsheets.
Conclusion
The 12 mutual funds recommended by Grok AI cover all major categories, offering a diversified mix of stability, growth, global exposure and thematic opportunities. Whether you are a conservative, moderate or aggressive investor, these schemes provide a solid foundation for building your 2026 portfolio.
However, always consider your risk appetite, investment horizon and financial goals before making any decisions.
If you are planning your investments for 2026, this curated list by Grok AI can serve as a valuable starting point.
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