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Mutual Funds & SIP

Good Mutual Funds to Invest in 2026: How to Choose One

A good mutual fund matches your goal, time horizon, risk and cost. How SEBI categories, riskometers, expense ratios and 2026 rule changes help you choose.

AI

Written by Ananya Iyer

Updated on 17 September 2026·6 min read

On this page8 sections
Credsir Mutual Funds & SIP guide cover with a trending up icon

A good mutual fund to invest in is one whose category, risk level and cost match your goal and how long you can stay invested. No single scheme is best for everyone. Equity funds suit goals several years away because their value can fall sharply in the short run, while liquid and short-term debt funds suit money you need soon.

Key facts

Item Position in September 2026
Industry assets ₹87,07,888 crore on 31 August 2026 (AMFI)
Investor accounts (folios) 28.35 crore on 31 August 2026
SIP inflow ₹32,297 crore in August 2026
Minimum SIP Can be as low as ₹500 a month, or ₹250 under Chhoti SIP
Rulebook SEBI (Mutual Funds) Regulations, 2026, in force from 1 April 2026
Scheme categories Revised by SEBI circular of 26 February 2026
Equity fund tax, tax year 2026-27 20% on gains within 12 months; 12.5% above ₹1.25 lakh after 12 months

Match the fund type to your goal

SEBI sorts schemes into equity, debt, hybrid, life cycle and other schemes such as index funds and fund of funds. Each category must follow fixed investment limits, so the category tells you what a fund can hold.

Category What SEBI requires it to hold What to expect
Large cap fund At least 80% in large cap stocks Equity risk, usually less volatile than mid or small cap
Flexi cap fund At least 65% in equity, any company size Manager chooses the mix
Multi cap fund At least 75% in equity, with 25% each in large, mid and small caps Fixed exposure to all three sizes
Mid cap and small cap funds At least 65% in mid or small cap stocks Higher swings; needs a long holding period
ELSS (tax saver) At least 80% in equity Three-year lock-in on each investment
Index funds and ETFs Track an index Low cost; returns follow the index
Liquid fund Debt and money market securities maturing within 91 days For money you may need soon
Life cycle fund Pre-set glide path across equity, debt, gold and other assets; terms of 5 to 30 years Exit load of 3%, 2% or 1% in years one to three

SEBI defines large caps as the 1st to 100th companies by full market value, mid caps as the 101st to 250th, and small caps as the rest. AMFI updates this list every six months, using data as of the end of June and December.

Our best mutual funds page lists schemes by category with current data, and the mutual fund screener lets you filter them yourself.

What changed for mutual funds in 2026

ItemDetails
New regulations.SEBI notified the Mutual Funds Regulations, 2026 on 14 January 2026, replacing the 1996 rules from 1 April 2026.
Base expense ratio.The cost cap now excludes statutory levies such as GST and transaction costs. For an open-ended equity scheme, the cap is 2.10% on the first ₹500 crore of assets and falls as the scheme grows. Index funds and ETFs are capped at 0.90%.
Solution-oriented funds closed.The retirement and children’s fund category was discontinued on 26 February 2026. Existing schemes stopped taking money and will be merged.
Life cycle funds added.These carry a maturity year in the name, such as “Life Cycle Fund 2045”, and follow a pre-set asset mix that changes as that year gets closer.
Overlap limit for sector and theme funds.A sectoral or thematic fund can overlap no more than 50% with the fund house’s other equity schemes, except large cap. Existing funds have three years to comply.

Checks before you choose a scheme

  1. Pick the category from your goal and time horizon, using the table above.
  2. Read the riskometer on the factsheet. It has six levels, from Low to Very High.
  3. Compare the scheme’s returns with its benchmark and category over five years or more, not just the last year.
  4. Check the expense ratio. A direct plan costs less than a regular plan of the same scheme, because no distributor commission is paid from it.
  5. Read the exit load and any lock-in in the Scheme Information Document.
  6. If you already hold funds, check that the new one does not own mostly the same stocks.
  7. Run your monthly amount through the SIP calculator to see what the goal needs at different return rates.

Past returns do not guarantee future returns. A fund that topped its category last year can lag the next.

How to start investing

  1. Complete your KYC with PAN, Aadhaar or another accepted identity and address proof.
  2. Choose where to invest: the fund house’s website or app, a registered platform, or a registered distributor.
  3. Choose the direct plan to invest on your own, or the regular plan if a distributor helps you.
  4. Select growth or IDCW (income distribution) and add a nominee.
  5. Invest a lump sum or register a SIP mandate from your bank account.
  6. Track your holdings through the consolidated account statement (CAS) you receive by email.

How mutual fund gains are taxed

From 1 April 2026, gains are taxed under the Income-tax Act, 2025. The rates for tax year 2026-27 are:

Fund type Held 12 months or less Held more than 12 months
Equity-oriented (at least 65% in listed Indian shares) 20% 12.5% on gains above ₹1.25 lakh a year
Specified debt funds bought on or after 1 April 2023 Your slab rate Your slab rate

Our page on mutual fund taxation covers hybrid and other funds. For personal advice on which schemes suit you, a SEBI-registered investment adviser charges a fee rather than earning commission.

Frequently asked questions

Which mutual fund is best to invest in now?

No scheme is best for everyone. Choose the category that fits your goal and time horizon, then compare schemes within it on cost, risk and long-term returns against the benchmark.

What are the best mutual funds to invest in 2026?

Credsir does not rank schemes in this guide. Our best mutual funds page shows category-wise data you can compare.

Which mutual fund is good for a beginner?

A broad equity fund, such as an index fund or flexi cap fund, spreads your money across many companies, and a SIP spreads your purchases over time. Money you may need within a year or two belongs in a liquid fund instead.

What is the minimum amount to invest in a mutual fund?

AMFI says a SIP can be as small as ₹500 a month, and ₹250 a month under Chhoti SIP. Lump sum minimums vary by scheme.

Is a direct plan better than a regular plan?

A direct plan has a lower expense ratio because it pays no distributor commission. A regular plan suits you if you want a distributor’s help.

Who can give mutual fund recommendations in India?

A SEBI-registered investment adviser can give personal advice for a fee. Mutual fund distributors earn commission from the fund house.

Sources

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