Investing in mutual funds has become one of the most preferred ways for individuals to grow their wealth in a systematic and disciplined manner. A mutual fund pools money from multiple investors and invests it into a diversified portfolio of equities, bonds, or other securities, managed by professional fund managers. Over the years, mutual funds have proven to be an effective way to build wealth for both short-term goals and long-term financial planning.
Earlier we wrote article on 13 Wealth Builder Mutual Funds with 5-Star Rating from Value Research to invest in 2025
What are Mutual Funds?
A mutual fund pools money from many investors and invests in a diversified basket of securities—equities, bonds, or a mix—managed by professional fund managers. Investors get units proportional to their contribution and benefit from diversification, professional research, and liquidity. Returns are linked to market performance, and risk varies by category and strategy.
What are ‘Wealth Builder’ Mutual Funds (as per Value Research)?
In the Value Research framework, long-term wealth builders are typically diversified equity categories that can compound capital across market cycles. These prominently include:
- Large-cap funds – invest primarily in the top 100 companies by market capitalization; provide relative stability and steady compounding.
- Flexi-cap funds – have full flexibility to move across large-, mid-, and small-caps based on opportunities. Explore Best Flexicap Mutual Funds for 2025 based on rolling returns.
- Value/Contra funds – follow a value or contrarian style to buy fundamentally strong but undervalued stocks aiming for mean reversion and long-term alpha.
Note: Value Research generally highlights 4-star and 5-star schemes as top performers on a risk-adjusted basis. For this article, we have focused only on 5-star rated options. Some schemes sit in Large & Mid Cap (a close proxy to the large-cap bucket for wealth building) and Focused strategies that still meet the diversified, long-term wealth creation objective.
* Mutual Fund details and performance history considered from ValueResearch Portal as on 27-Aug-2025.
List of 13 Wealth Builder Mutual Funds with 5-Star Rating (5-Year Returns included where available)
| Category | Fund Name | 5 Yr Annualised Returns (%) |
|---|---|---|
| Flexi Cap | HDFC Focused Fund | 28.41 |
| Flexi Cap | HDFC Flexi Cap Fund | 27.78 |
| Flexi Cap | Parag Parikh Flexi Cap Fund | 22.76 |
| Flexi Cap | Invesco India Flexi Cap Fund | — |
| Flexi Cap | Invesco India Focused Fund | — |
| Flexi Cap | ICICI Prudential India Equity FOF | 25.40 |
| Flexi Cap | HDFC Retirement Savings Fund Equity Plan | 24.97 |
| Large & Mid Cap | Motilal Oswal Large and Midcap Fund | 28.75 |
| Large & Mid Cap | ICICI Prudential Large & Mid Cap Fund | 26.49 |
| Large & Mid Cap | Bandhan Large & Mid Cap Fund | 26.18 |
| Large & Mid Cap | UTI Large & Mid Cap Fund | 24.98 |
| Value Fund | ICICI Prudential Value Fund | 26.18 |
| Value Fund | SBI Contra Fund | 29.63 |
Deep Dive into Each Fund
#1 – HDFC Focused Fund
- Fund Objective: Aims to generate long-term capital appreciation by investing in a concentrated portfolio of high-quality companies across sectors.
- Annualised Returns:
- 1 Year: 8.16%
- 3 Years: 23.94%
- 5 Years: 28.41%
- 10 Years: 16.28%
- Who Can Invest: Investors looking for focused exposure to top companies and long-term growth.
- Risk Factors:
- Concentrated portfolio risk
- High market volatility impact
- Sector allocation risks
#2 – HDFC Flexi Cap Fund
- Fund Objective: Seeks to deliver capital appreciation by investing across market capitalizations with a flexible approach.
- Annualised Returns:
- 1 Year: 6.89%
- 3 Years: 23.09%
- 5 Years: 27.78%
- 10 Years: 17.11%
- Who Can Invest: Ideal for investors looking for diversification across large, mid, and small caps.
- Risk Factors:
- Exposure to mid & small caps increases volatility
- Market cycle dependency
This fund was part of our earlier article on Best Mutual Funds to invest in 2025 as per Google Gemini AI.
#3 – Parag Parikh Flexi Cap Fund
- Fund Objective: Focuses on long-term wealth creation through domestic and international equities with a value-investing approach.
- Annualised Returns:
- 1 Year: 6.80%
- 3 Years: 21.09%
- 5 Years: 22.76%
- 10 Years: 18.89%
- Who Can Invest: Investors seeking global diversification and stability.
- Risk Factors:
- Currency fluctuation risks (due to overseas investments)
- Market timing risk
#4 – Invesco India Flexi Cap Fund
- Fund Objective: Invests across market caps with a bottom-up stock-picking approach to generate long-term growth.
- Annualised Returns:
- 1 Year: 5.83%
- 3 Years: 24.70%
- 5 Years: NA
- Who Can Invest: Investors preferring active management and diversification.
- Risk Factors:
- Limited track record for long-term performance
- Mid and small-cap volatility
#5 – Invesco India Focused Fund
- Fund Objective: Seeks capital appreciation by investing in up to 30 high-conviction stocks.
- Annualised Returns:
- 1 Year: 2.95%
- 3 Years: 25.31%
- 5 Years: NA
- Who Can Invest: Investors seeking aggressive growth in a concentrated portfolio.
- Risk Factors:
- Concentration risk
- Higher volatility in short term
#6 – ICICI Prudential India Equity FOF
- Fund Objective: Fund of Funds scheme investing in diversified equity mutual funds to deliver superior risk-adjusted returns.
- Annualised Returns:
- 1 Year: 0.98%
- 3 Years: 21.28%
- 5 Years: 25.40%
- Who Can Invest: Beginners looking for simplified exposure to equities via multiple funds.
- Risk Factors:
- Double expense ratio impact
- Market dependency of underlying schemes
#7 – HDFC Retirement Savings Fund Equity Plan
- Fund Objective: Aims for long-term wealth creation with retirement-focused investing strategy in equities.
- Annualised Returns:
- 1 Year: -0.58%
- 3 Years: 19.77%
- 5 Years: 24.97%
- Who Can Invest: Long-term retirement planners with higher risk appetite.
- Risk Factors:
- Lock-in until retirement
- Market downturn risk
The above fund was part of 20 Equity Mutual Funds with Low Beta and High Alpha article which we wrote earlier.
#8 – Motilal Oswal Large & Midcap Fund
- Fund Objective: Seeks to capture growth opportunities in both large and midcap segments.
- Annualised Returns:
- 1 Year: 3.52%
- 3 Years: 27.93%
- 5 Years: 28.75%
- Who Can Invest: Investors looking for high-growth opportunities with moderate risk.
- Risk Factors:
- Midcap volatility
- High beta stocks impact performance
#9 – ICICI Prudential Large & Mid Cap Fund
- Fund Objective: Focuses on wealth creation through a mix of large-cap stability and mid-cap growth potential.
- Annualised Returns:
- 1 Year: 2.78%
- 3 Years: 22.15%
- 5 Years: 26.49%
- 10 Years: 17.50%
- Who Can Invest: Investors with medium to long-term goals looking for a balance of growth and stability.
- Risk Factors:
- Midcap exposure risk
- Fund performance linked to market cycle
We highlighted above fund as part of 10 CRISIL 5-Star Rated Mutual Funds with Over 30% CAGR in 5 Years.
#10 – Bandhan Large & Mid Cap Fund
- Fund Objective: Generates long-term capital appreciation by investing in a blend of large and mid-cap stocks.
- Annualised Returns:
- 1 Year: -0.27%
- 3 Years: 25.28%
- 5 Years: 26.18%
- 10 Years: 17.80%
- Who Can Invest: Investors seeking consistent returns through diversified large & midcap investments.
- Risk Factors:
- Market correction risk
- Midcap underperformance impact
#11 – UTI Large & Mid Cap Fund
- Fund Objective: Balances stability from large-caps and growth from midcaps to deliver long-term returns.
- Annualised Returns:
- 1 Year: -1.04%
- 3 Years: 21.82%
- 5 Years: 24.98%
- 10 Years: 14.74%
- Who Can Invest: Investors aiming for wealth creation with diversified exposure.
- Risk Factors:
- Moderate volatility
- Sector allocation risks
#12 – ICICI Prudential Value Fund
- Fund Objective: Invests in undervalued stocks with strong fundamentals to deliver long-term appreciation.
- Annualised Returns:
- 1 Year: 2.34%
- 3 Years: 22.14%
- 5 Years: 26.18%
- 10 Years: 16.32%
- Who Can Invest: Value investors looking to benefit from mispriced opportunities.
- Risk Factors:
- Value traps
- Longer holding period needed for returns
The above fund was part of our earlier article 10 Mutual Fund Schemes with 20-Year Returns Between 1775% and 2002%.
#13 – SBI Contra Fund
- Fund Objective: Follows a contrarian investment strategy by investing in out-of-favor sectors and stocks with turnaround potential.
- Annualised Returns:
- 1 Year: -3.83%
- 3 Years: 21.45%
- 5 Years: 29.63%
- 10 Years: 17.04%
- Who Can Invest: Aggressive investors looking for high-risk, high-reward opportunities.
- Risk Factors:
- Contrarian bets may take long to perform
- Higher risk compared to peers
Conclusion
These 13 Wealth Builder Mutual Funds with 5-Star Rating from Value Research have consistently delivered strong returns over different time horizons. Whether you prefer flexi-cap diversification, large & midcap balance, or value-driven investing, these schemes provide multiple options for investors in 2025. While past performance is not a guarantee for future results, their strong track record, professional fund management, and consistent ratings make them some of the best picks for long-term wealth creation.
If you are planning your investment journey in 2025, carefully evaluate your risk profile, financial goals, and investment horizon before investing in any of these funds.
- 13 Wealth Builder Mutual Funds with 5 Star Rating from Value Research to invest in 2025 - August 30, 2025
- Top Investing Mistakes that are Common while Applying for IPOs - August 29, 2025
- 5 Best Midcap Mutual Funds to Invest in 2025 (Based on Rolling Returns) - August 29, 2025
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