Indian stock markets have shown remarkable growth in the last few years, driven by strong corporate earnings, policy reforms and rising retail participation. Many investors are now exploring reliable ways to plan their 2026 investments. With AI-based tools becoming an integral part of financial decision-making, I wanted to test how Microsoft Copilot evaluates the best-performing mutual funds for the coming year. In this article, I share the exact question asked to Microsoft Copilot, the list of funds it recommended, and a detailed analysis of each scheme using the latest performance data as of 2-Dec-2025. This guide includes fund objectives, AUM, historical returns, risks and who should invest. Which are the Best Mutual Funds to invest in 2026 as per Microsoft Copilot AI?
Last week we explored 10 Best Mutual Funds to invest in 2026 as per ChatGPT.
What I Asked Microsoft Copilot
To maintain transparency, here is the exact question I used:
“Based on current market trends, give me a list of best mutual funds to invest in India in 2026 across largecap, midcap, smallcap, flexicap and global funds category. I just need the category of the fund and name of the fund.”
Copilot analyzed long-term trends, category performance, consistency of returns, fund stability and global diversification before generating its list.
Best Mutual Funds to Invest in 2026 (As per Microsoft Copilot AI)
Based on the query, Microsoft Copilot suggested the following 5 mutual funds across diversified categories:
| S No | Category | Mutual Fund Name | 10 Yrs CAGR |
|---|---|---|---|
| 1 | Largecap | SBI Large Cap Fund | 14.0% |
| 2 | Midcap | HDFC Mid Cap Fund | 19.4% |
| 3 | Smallcap | Nippon India Small Cap Fund | 21.1% |
| 4 | Flexicap | Parag Parikh Flexi Cap Fund | 18.3% |
| 5 | Global Funds | Franklin U.S. Opportunities Equity Active Fund | 15.2% |
Copilot also indicated several other notable mutual funds, which are added at the end of the article below for investor reference.
Deep Dive Into These 5 Best Mutual Funds for 2026 (As per Microsoft Copilot AI)
Below is a detailed, human-written analysis of each recommended scheme, covering objectives, performance and suitability.
1) SBI Large Cap Fund
Fund Objective: Aims to generate long-term wealth by investing primarily in established and fundamentally strong largecap companies.
Category: Largecap
AUM: ₹ 54,688 Crores
Risk Level: High
Performance (CAGR Returns):
- 3 Years – 14.8%
- 5 Years – 17.2%
- 10 Years – 14.0%
Who Can Invest:**
- Suitable for conservative to moderate investors.
- Ideal for those looking for stability and steady long-term growth.
Risk Factors:
- Limited upside during aggressive bull phases.
- Can underperform peers during high volatility.
2) HDFC Mid Cap Fund
Fund Objective: Invests in quality mid-sized companies with strong earnings potential and sustainable business models.
Category: Midcap
AUM: ₹ 89,383 Crores
Risk Level: Very High
Performance (CAGR Returns):
- 3 Years – 26.3%
- 5 Years – 27.8%
- 10 Years – 19.4%
Who Can Invest:
- Investors with higher risk appetite.
- Ideal for long-term wealth creation (5+ years).
Risk Factors:
- Midcap volatility can cause sharp corrections.
- Temporary underperformance during market downturns.
We explored this fund as part of 10 Best Mutual Funds to Invest in 2026 as per Gemini AI.
3) Nippon India Small Cap Fund
Fund Objective: Focuses on high-potential smallcap companies capable of delivering strong long-term compounding.
Category: Smallcap
AUM: ₹ 68,969 Crores
Risk Level: Very High
Performance (CAGR Returns):
- 3 Years: 22.2%
- 5 Years: 30.3%
- 10 Years: 21.1%
Who Can Invest:
- Best for aggressive investors aiming for high capital appreciation.
- Suitable for those willing to stay invested for 7+ years.
Risk Factors:
- High volatility and liquidity challenges.
- Can face deep drawdowns during market corrections.
4) Parag Parikh Flexi Cap Fund
Fund Objective: A flexible equity fund investing in Indian equities, foreign equities and across market caps.
Category: Flexicap
AUM: ₹ 1,25,800 Crores
Risk Level: Very High
Performance (CAGR Returns):
- 3 Years: 21.8%
- 5 Years: 21.8%
- 10 Years: 18.3%
Who Can Invest:
- Suitable for diversified long-term equity exposure.
- Ideal for investors seeking global diversification.
Risk Factors:
- Currency fluctuations.
- International market risks.
This fund too generated Highest Rolling Returns in Flexicap Mutual Funds Category in the last 12 years.
5) Franklin U.S. Opportunities Equity Active Fund
Fund Objective: Invests in high-growth U.S. companies across technology, healthcare, consumer and innovation-driven sectors.
Category: Global Fund
AUM: ₹ 4,520 Crores
Risk Level: Very High
Performance (CAGR Returns):
- 3 Years: 25.2%
- 5 Years: 11.6%
- 10 Years: 15.2%
Who Can Invest:
- Suitable for investors seeking global exposure and currency diversification.
- Ideal for those who believe in U.S. innovation-led growth.
Risk Factors:
- High volatility due to global market events.
- Foreign exchange fluctuations.
Other Notable Mutual Funds Suggested by Microsoft Copilot
🏦 Large Cap Funds – Other notable mentions:
-
- ICICI Prudential Bluechip Fund (renamed now to ICICI Large Cap Fund)
- Axis Bluechip Fund (renamed now to Axis Large Cap Fund)
🚀 Mid Cap Funds – Other strong contenders:
-
- Kotak Emerging Equity Fund
- Mirae Asset Midcap Fund
- Axis Midcap Fund
📈 Small Cap Funds – Other options:
-
- SBI Small Cap Fund (One of the Best Smallcap Mutual Funds in 2025 based on rolling returns)
- Axis Small Cap Fund
🔄 Flexi Cap Funds – Other strong picks:
-
- HDFC Flexi Cap Fund
- UTI Flexi Cap Fund
🌍 Global / International Funds – Other options:
-
- Motilal Oswal Nasdaq 100 Fund of Fund (One of the Top International Mutual Funds for 2025)
- ICICI Prudential Global Stable Equity Fund
Should We Trust AI Tools Like Microsoft Copilot for Investment Choices?
AI tools are extremely useful for:
- Quickly screening top-performing funds
- Comparing long-term historical returns
- Identifying consistency and stability
- Providing unbiased data-backed recommendations
However, they also come with limitations:
- They rely only on publicly available data
- They cannot predict future market movements
- They do not consider your personal risk profile
Bottom Line: AI tools are great for research support but should not replace human judgment. Always cross-check using AMFI, fund factsheets or independent research tools.
Conclusion
Microsoft Copilot’s list of the best mutual funds to invest in 2026 covers diversified categories and includes schemes with strong long-term performance. These funds provide a solid foundation for investors planning their 2026 portfolio.
However, every investor must align investments with their risk tolerance, financial goals and time horizon. Use AI tools as a support system—not the final decision-maker.
If you’re planning your 2026 investments, these 5 funds offer an excellent starting point for building a stable and growth-oriented mutual fund portfolio.
- 5 Best Mutual Funds to Invest in 2026 (As per Microsoft Copilot AI) - December 3, 2025
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