If you are young investor, wanted to start early, take calculated risk and compound for the next decade, you are at right place. In this article, we focus on growth-oriented categories (largecap, large & midcap, midcap, smallcap, flexicap, and global funds), use direct plans only, and rely on recent CAGR performance with a long-term lens. This article shortlists 10 Best Mutual Funds to Invest in 2025 for Gen Z.
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Who are Gen Z Investors?
Generation Z includes individuals born between 1997 and 2012. They are digital natives, financially aware, and eager to build wealth early. With access to mobile investing platforms and financial education online, Gen Z investors can benefit from long-term compounding by starting early and staying consistent.
Why a Separate Set of Mutual Funds for Gen Z?
Gen Z investors have unique advantages when it comes to investing:
- They are young and can afford a longer investment duration.
- They can tolerate higher market volatility.
- High-risk, high-return funds can offer superior long-term rewards.
This allows them to explore midcap, smallcap, flexicap, and global funds, in addition to largecap stability.
How We Filtered These Mutual Funds for Gen Z
To shortlist mutual funds suitable for Gen Z investors, we followed these steps:
- Considered Direct Plans only.
- Included funds across high-growth categories: Largecap, Large & Midcap, Midcap, Smallcap, Flexicap, and Global Funds.
- Evaluated historical performance based on 5-year CAGR returns (as on 29-Oct-2025).
- Selected funds with consistent long-term performance and robust AuM.
- Further filtered based on rolling returns in these mutual funds.
10 Best Mutual Funds to Invest in 2025 for Gen Z
(Period Considered: 5-Year CAGR Returns)
| S No. | Mutual Fund Scheme | Category | 5-Year CAGR Returns |
|---|---|---|---|
| 1 | Nippon India Large Cap Fund | Largecap | 26.28% |
| 2 | ICICI Prudential Large Cap Fund | Largecap | 22.76% |
| 3 | Invesco India Large & Mid Cap Fund | Large & Midcap | 25.61% |
| 4 | Edelweiss Mid Cap Fund | Midcap | 31.28% |
| 5 | Nippon India Growth Mid Cap Fund | Midcap | 30.60% |
| 6 | Nippon India Small Cap Fund | Smallcap | 33.87% |
| 7 | HDFC Small Cap Fund | Smallcap | 31.69% |
| 8 | JM Flexi Cap Fund | Flexicap | 27.38% |
| 9 | Parag Parikh Flexi Cap Fund | Flexicap | 23.80% |
| 10 | Motilal Oswal Nasdaq 100 Fund of Fund | Global Fund | 23.30% |
Deep Dive into Each Mutual Fund
1) Nippon India Large Cap Fund
Fund Objective: Invests in leading largecap companies with stable earnings and growth potential.
CAGR Returns:
- 3 Years: 20.99%
- 5 Years: 26.28%
- 10 Years: 15.83%
Why Gen Z Should Invest:
- Strong core foundation; suitable as a portfolio anchor.
- Consistent performer among largecap peers.
Risk Factors:
- May underperform aggressive funds in bull markets.
This fund is among the 9 Large Cap Mutual Funds that Outperformed Their Benchmarks Over 3, 5, and 10 Years to Invest in 2025.
2) ICICI Prudential Large Cap Fund
Fund Objective: Focuses on large companies following a value-growth blend.
CAGR Returns:
- 3 Years: 19.11%
- 5 Years: 22.76%
- 10 Years: 15.52%
Why Gen Z Should Invest:
- Balanced risk profile; good for stable compounding.
Risk Factors:
- Returns can moderate during narrow market rallies.
3) Invesco India Large & Mid Cap Fund
Fund Objective: Combines stability of largecaps with midcap growth.
CAGR Returns:
- 3 Years: 26.82%
- 5 Years: 25.61%
- 10 Years: 17.77%
Why Gen Z Should Invest:
- Excellent for SIP investors looking for balance between safety and growth.
Risk Factors:
- Moderate volatility due to midcap allocation.
Earlier we covered this fund among 12 Mutual Funds Outperformed in Last 2 Years with 66% to 104% Returns.
4) Edelweiss Mid Cap Fund
Fund Objective: Targets midcap companies with scalable business models.
CAGR Returns:
- 3 Years: 26.97%
- 5 Years: 31.28%
- 10 Years: 19.66%
Why Gen Z Should Invest:
- Strong long-term potential for higher returns.
Risk Factors:
- High volatility; suitable for investors with longer time horizons.
We analysed this fund earlier at 5 Best Midcap Mutual Funds to Invest in 2025 (Based on Rolling Returns).
5) Nippon India Growth Mid Cap Fund
Fund Objective: Invests in quality mid-sized companies with strong potential.
CAGR Returns:
- 3 Years: 26.63%
- 5 Years: 30.60%
- 10 Years: 18.99%
Why Gen Z Should Invest:
- High return potential for long-term wealth creation.
Risk Factors:
- May face short-term drawdowns during market corrections.
6) Nippon India Small Cap Fund
Fund Objective: Focuses on emerging companies with strong growth prospects.
CAGR Returns:
- 3 Years: 24.14%
- 5 Years: 33.87%
- 10 Years: 21.48%
Why Gen Z Should Invest:
- Ideal for aggressive young investors seeking compounding power.
Risk Factors:
- High volatility; not suitable for short-term investors.
Do you know that this fund is among 6 Mutual Funds That Turned ₹ 1 Lakh Into Over ₹ 6 Lakhs in 10 Years.
7) HDFC Small Cap Fund
Fund Objective: Invests in quality small companies with strong fundamentals.
CAGR Returns:
- 3 Years: 24.48%
- 5 Years: 31.69%
- 10 Years: 19.71%
Why Gen Z Should Invest:
- Offers excellent long-term potential with disciplined investing.
Risk Factors:
- May experience deep corrections in short-term cycles.
8) JM Flexi Cap Fund
Fund Objective: Invests dynamically across market caps.
CAGR Returns:
- 3 Years: 24.47%
- 5 Years: 27.38%
- 10 Years: 18.31%
Why Gen Z Should Invest:
- Suitable for investors seeking flexibility and adaptive strategy.
Risk Factors:
- Fund’s dynamic allocation may affect short-term returns.
9) Parag Parikh Flexi Cap Fund
Fund Objective: Blends Indian equities with global exposure for stable compounding.
CAGR Returns:
- 3 Years: 22.96%
- 5 Years: 23.80%
- 10 Years: 18.75%
Why Gen Z Should Invest:
- Excellent diversification option for balanced risk-takers.
Risk Factors:
- Global allocation introduces currency and market dependency.
This is exceptional fund which we covered in 10 Mutual Funds with Best Risk-Adjusted Returns to invest in 2025.
10) Motilal Oswal Nasdaq 100 Fund of Fund
Fund Objective: Offers exposure to US technology and innovation leaders.
CAGR Returns:
- 3 Years: 37.31%
- 5 Years: 23.30%
- 10 Years: NA
Why Gen Z Should Invest:
- Perfect for global diversification and exposure to tech growth.
Risk Factors:
- High volatility and foreign exchange risk.
Performance Summary (CAGR Returns & Scale)
| Scheme | Category | AuM (Cr) | 3Y CAGR | 5Y CAGR | 10Y CAGR |
|---|---|---|---|---|---|
| Nippon India Large Cap Fund | Largecap | 46,463.11 | 20.99% | 26.28% | 15.83% |
| ICICI Prudential Large Cap Fund | Largecap | 73,034.52 | 19.11% | 22.76% | 15.52% |
| Invesco India Large & Mid Cap Fund | Large & Midcap | 8,441.21 | 26.82% | 25.61% | 17.77% |
| Edelweiss Mid Cap Fund | Midcap | 11,731.01 | 26.97% | 31.28% | 19.66% |
| Nippon India Growth Mid Cap Fund | Midcap | 39,328.98 | 26.63% | 30.60% | 18.99% |
| Nippon India Small Cap Fund | Smallcap | 66,136.11 | 24.14% | 33.87% | 21.48% |
| HDFC Small Cap Fund | Smallcap | 36,827.67 | 24.48% | 31.69% | 19.71% |
| JM Flexi Cap Fund – Direct – Growth | Flexicap | 5,990.34 | 24.47% | 27.38% | 18.31% |
| Parag Parikh Flexi Cap Fund | Flexicap | 1,19,723.48 | 22.96% | 23.80% | 18.75% |
| Motilal Oswal Nasdaq 100 Fund of Fund | Global Fund | 6,089.46 | 37.31% | 23.30% | NA |
Suggested Portfolio Allocation for Gen Z
A sample allocation approach for a Gen Z investor with a long-term horizon (7–10+ years) could look like this:
- 20% — Largecap Fund (stability + foundation)
- 20% — Large & Midcap Fund (balanced growth)
- 20% — Midcap Fund (compounding potential)
- 20% — Smallcap Fund (high growth, high risk)
- 10% — Flexicap Fund (dynamic allocation flexibility)
- 10% — Global Fund (international diversification)
This allocation balances stability, growth, and global exposure. Investors can adjust proportion based on their personal risk tolerance.
Summary and Conclusion
For Gen Z investors, starting early provides a compounding advantage. These 10 funds offer a mix of high-growth and stable opportunities across market caps and geographies.
Systematic investing (SIP) with a minimum horizon of 7–10 years is recommended to maximise long-term returns.
Disclaimer: Mutual fund investments are subject to market risks. Please read all scheme-related documents carefully before investing. The past performance mentioned in this article is not indicative of future returns. Investors are advised to consult a financial advisor to ensure that the selected funds align with their risk profile and investment objectives.
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