When it comes to mutual fund investing, balancing risk and returns is the most critical factor. Some funds deliver superior returns but with high volatility, while others offer stable performance with minimal risk. What if you could find mutual funds that offer the best of both worlds – low risk and high return? ValueResearch, a trusted mutual fund research platform, provides insights through its Fund Risk Grade and Fund Return Grade ratings. Based on these parameters, we have shortlisted 7 mutual funds that carry a Low Risk Grade and High Return Grade – making them ideal options to consider for 2025.
Earlier we wrote about 13 Wealth Builder Mutual Funds with 5 Star Rating from ValueResearch to invest in 2025.
What is Low Risk Grade as per ValueResearch?
The Fund Risk Grade by ValueResearch measures how volatile a fund has been compared to its peers. A Low Risk Grade means:
- The fund has shown lower volatility than its category average.
- It has demonstrated consistent performance across market cycles.
- The Standard Deviation and Beta values are generally lower, indicating controlled downside risk.
Such funds are suitable for investors who prefer steady growth over speculative gains.
What is High Return Grade as per ValueResearch?
The Fund Return Grade indicates how well a fund has performed relative to its category peers on a risk-adjusted basis. A High Return Grade implies:
- The fund has consistently delivered superior long-term returns.
- It has maintained favorable Sharpe and Sortino Ratios, signifying efficient risk-reward balance.
- It typically outperforms benchmarks and peer funds across multiple timeframes.
How We Filtered These Funds
To identify these top-performing mutual funds, we followed a structured filtering process:
- Considered all equity mutual funds listed on ValueResearch.
- Shortlisted only those funds categorized as having Low Risk Grade.
- From this subset, selected funds with High Return Grade.
- Finally, we arrived at 7 mutual funds that combine both parameters – offering the ideal blend of low risk and high returns for 2025.
- The performance data is as of 17-Oct-2025.
7 Low Risk-High Return Mutual Funds as per ValueResearch to Invest in 2025
Below are the 7 mutual funds that meet both ValueResearch criteria and have delivered impressive long-term performance:
Understanding Risk Ratios
Before we dive into fund-wise details, let’s briefly understand what each risk ratio means and how to interpret it:
- Standard Deviation: Indicates how much a fund’s returns fluctuate compared to its average. (Lower values indicate more stability.)
- Sharpe Ratio: Measures excess return per unit of total risk. (Higher is better.)
- Sortino Ratio: Considers only downside volatility. (Higher means better downside protection.)
- Beta: Measures volatility relative to the market. (Beta < 1 = less volatile, safer.)
- Alpha: Shows the fund’s outperformance over benchmark. (Positive Alpha = good.)
- Information Ratio: Reflects consistency in outperforming benchmark. (Higher = better consistency.)
- R-Squared: Shows how closely fund follows its benchmark. (Higher = more aligned performance.)
Deep Dive into these Low Risk-High Return Mutual Funds of 2025
#1 – HDFC Flexi Cap Fund
Investment Objective: To generate long-term capital appreciation by investing across market capitalizations.
Performance Metrics:
- 3-Year Return: 25.0%
- 5-Year Return: 30.3%
- 10-Year Return: 16.9%
Risk Ratios:
- Standard Deviation: 10.92 (Low – indicates stable returns with less volatility)
- Sharpe Ratio: 1.48 (Good – strong risk-adjusted performance)
- Sortino Ratio: 2.46 (Excellent – effective downside protection)
- Beta: 0.80 (Below 1 – less volatile than benchmark index)
- Alpha: 8.45 (Positive – strong outperformance over benchmark)
- Information Ratio: 1.68 (Good consistency in delivering excess returns)
- R-Squared: 0.93 (High – closely tracks benchmark for stability)
Why to Invest: Diversified exposure and strong alpha generation make it a stable performer.
Risk Factors: Market volatility can affect short-term NAV, but long-term prospects remain strong.
Do you know that this mutual fund is among the 7 most invested mutual fund in Sep-2025.
#2 – HDFC Focused Fund
Investment Objective: Focuses on a concentrated portfolio of quality stocks across sectors.
Performance Metrics:
- 3-Year Return: 25.1%
- 5-Year Return: 30.9%
- 10-Year Return: 16.0%
Risk Ratios:
- Standard Deviation: 9.93 (Low – minimal volatility for a focused strategy)
- Sharpe Ratio: 1.59 (Excellent – strong risk-adjusted return)
- Sortino Ratio: 2.52 (High – protects well against downside)
- Beta: 0.73 (Below 1 – less volatile than benchmark)
- Alpha: 8.75 (Positive – superior fund manager performance)
- Information Ratio: 1.40 (Good consistency over benchmark)
- R-Squared: 0.93 (High – aligned with index movement)
Why to Invest: Focused yet balanced, ideal for investors seeking high-quality concentrated portfolios.
Risk Factors: Concentration can amplify risks if few stocks underperform.
#3 – ICICI Prudential Infrastructure Fund
Investment Objective: Seeks long-term capital appreciation by investing in infrastructure-related sectors.
Performance Metrics:
- 3-Year Return: 30.1%
- 5-Year Return: 38.8%
- 10-Year Return: 17.7%
Risk Ratios:
- Standard Deviation: 14.73 (Moderate – slightly higher due to sector exposure)
- Sharpe Ratio: 1.42 (Good – efficient risk-reward balance)
- Sortino Ratio: 2.20 (Strong downside control)
- Beta: 0.55 (Low – less volatile than market)
- Alpha: 8.15 (Positive – outperformed index strongly)
- Information Ratio: -0.19 (Slightly inconsistent versus benchmark)
- R-Squared: 0.79 (Moderate – diversification from index)
Why to Invest: Captures India’s infrastructure growth story with consistent outperformance.
Risk Factors: Sector concentration may cause short-term fluctuations.
Earlier we featured this fund among 11 Mutual Funds Outperformed in Last 5 Years with 376% to 415% Absolute Returns.
#4 – ICICI Prudential Large Cap Fund
Investment Objective: To generate capital appreciation by investing in large-cap blue-chip companies.
Performance Metrics:
- 3-Year Return: 20.2%
- 5-Year Return: 22.6%
- 10-Year Return: 15.3%
Risk Ratios:
- Standard Deviation: 11.46 (Low – stable performance)
- Sharpe Ratio: 1.07 (Decent – steady risk-adjusted returns)
- Sortino Ratio: 1.77 (Good downside protection)
- Beta: 0.91 (Near market – balanced volatility)
- Alpha: 4.40 (Positive – consistent outperformance)
- Information Ratio: 1.32 (Good – consistency in returns)
- R-Squared: 0.95 (High – follows benchmark closely)
Why to Invest: Safe bet among large caps; ideal for conservative investors.
Risk Factors: Limited upside during small or midcap rallies.
#5 – ICICI Prudential Large & Mid Cap Fund
Investment Objective: Combines stability of large caps with growth potential of mid caps.
Performance Metrics:
- 3-Year Return: 23.9%
- 5-Year Return: 29.1%
- 10-Year Return: 17.2%
Risk Ratios:
- Standard Deviation: 11.76 (Low – well managed volatility)
- Sharpe Ratio: 1.27 (Good – strong risk-return tradeoff)
- Sortino Ratio: 1.86 (Effective downside control)
- Beta: 0.87 (Below 1 – less volatile)
- Alpha: 6.97 (Positive – superior returns over benchmark)
- Information Ratio: 1.44 (Strong – consistent outperformance)
- R-Squared: 0.90 (Good benchmark alignment)
Why to Invest: Balanced mix of growth and safety; excellent long-term compounding potential.
Risk Factors: Moderate volatility from midcap holdings.
#6 – Nippon India Large Cap Fund
Investment Objective: To generate consistent long-term returns by investing in large-cap leaders.
Performance Metrics:
- 3-Year Return: 21.7%
- 5-Year Return: 26.2%
- 10-Year Return: 15.7%
Risk Ratios:
- Standard Deviation: 11.72 (Low – stable)
- Sharpe Ratio: 1.15 (Good – efficient risk-return balance)
- Sortino Ratio: 1.78 (Good downside control)
- Beta: 0.93 (Slightly below 1 – controlled volatility)
- Alpha: 5.47 (Positive – steady outperformance)
- Information Ratio: 1.84 (Very good – consistent benchmark beating)
- R-Squared: 0.95 (High – strong correlation to index)
Why to Invest: Reliable large-cap fund with steady track record.
Risk Factors: Could underperform in midcap-dominated bull markets.
This fund is consistent performer and is among 9 Large Cap Mutual Funds that Outperformed Their Benchmarks Over 3, 5, and 10 Years to Invest in 2025.
#7 – SBI Contra Fund
Investment Objective: To generate long-term capital appreciation through a contrarian investment approach that invests in undervalued and out-of-favor stocks.
Performance Metrics:
- 3-Year Return: 21.8%
- 5-Year Return: 30.6%
- 10-Year Return: 16.8%
Risk Ratios:
- Standard Deviation: 12.20 (Moderate – indicates acceptable volatility given the contrarian strategy)
- Sharpe Ratio: 1.13 (Good – delivers healthy risk-adjusted returns)
- Sortino Ratio: 1.80 (Strong – reflects effective downside protection)
- Beta: 0.90 (Below 1 – less volatile than the overall market)
- Alpha: 5.19 (Positive – indicates strong outperformance versus the benchmark)
- Information Ratio: 1.19 (Good – demonstrates consistency in beating the benchmark)
- R-Squared: 0.93 (High – signifies strong correlation with its benchmark)
Why to Invest: SBI Contra Fund follows a value-oriented, contrarian approach that capitalizes on market inefficiencies. It identifies undervalued stocks and holds them until the market recognizes their true potential. This strategy has delivered impressive long-term returns.
Risk Factors: Being a contrarian fund, it may underperform during bull runs when momentum stocks dominate. Investors should have a high tolerance for short-term fluctuations and a long-term perspective of 5 years or more.
Performance Summary Table
| Mutual Fund Scheme | 3-Year Return (%) | 5-Year Return (%) | 10-Year Return (%) | Sharpe Ratio |
|---|---|---|---|---|
| HDFC Flexi Cap Fund | 25.0 | 30.3 | 16.9 | 1.48 |
| HDFC Focused Fund | 25.1 | 30.9 | 16.0 | 1.59 |
| ICICI Prudential Infrastructure Fund | 30.1 | 38.8 | 17.7 | 1.42 |
| ICICI Prudential Large Cap Fund | 20.2 | 22.6 | 15.3 | 1.07 |
| ICICI Prudential Large & Mid Cap Fund | 23.9 | 29.1 | 17.2 | 1.27 |
| Nippon India Large Cap Fund | 21.7 | 26.2 | 15.7 | 1.15 |
| SBI Contra Fund | 21.8 | 30.6 | 16.8 | 1.13 |
Explore 10 Mutual Funds Outperformed in Last 10 Years with 495% to 630% Returns.
Conclusion
The above 7 mutual funds are carefully selected based on ValueResearch’s Low Risk and High Return grades. They represent a solid balance of performance consistency, low volatility, and superior risk-adjusted returns. However, investors should not rely solely on these ratings. It’s essential to:
- Align fund selection with your financial goals and risk appetite.
- Review fund manager consistency and portfolio composition.
- Continue tracking performance periodically.
These funds can serve as a core part of your long-term equity portfolio in 2025, offering the best mix of safety and growth potential.
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very good info