Top 10 Long Term Mutual Funds in India (2024)

Long-term investment involves holding assets for years or decades. This strategy leverages compounding for substantial returns, helps investors weather market volatility, and provides stability against short-term fluctuations. Long-term mutual funds invest in equities, balanced funds, or diversified portfolios to generate significant returns. 

These investments are essential for financial planning, particularly retirement, as they offer sustained growth over time. They also help accumulate funds for education by capitalising on potential capital appreciation. For those aiming for overall wealth accumulation, long term mutual funds offer consistent and steady growth. This article will explore a list of the top long term mutual funds in 2024, fund overviews, and how to invest in them.

Top 10 Long Term Mutual Funds in 2024 

The following is an educational list of the best long-term mutual funds based on their 3-yr, 5-yr, and 10-yr CAGR:

Fund Name	Category	Fund Size (Rs. in Cr)	Expense Ratio (%)	3Y CAGR	5Y CAGR	10Y CAGR
SBI PSU Fund	Thematic Fund	4851.11	0.72	38.91	29.02	13.52
Motilal Oswal Midcap Fund	Mid Cap Fund	15940.06	0.60	37.72	36.07	22.85
ICICI Pru Infrastructure Fund	Sectoral Fund - Infrastructure	6062.77	1.18	37.05	33.80	18.27
HDFC Infrastructure Fund	Sectoral Fund - Infrastructure	2533.24	1.11	36.60	28.61	12.99
Invesco India PSU Equity Fund	Thematic Fund	1593.41	0.76	36.44	32.54	19.48
Nippon India Power & Infra Fund	Sectoral Fund - Energy & Power	7537.49	0.98	35.49	33.58	18.19
DSP India T.I.G.E.R Fund	Sectoral Fund - Infrastructure	5500.38	0.89	35.07	33.25	19.34
LIC MF Infra Fund	Sectoral Fund - Infrastructure	725.10	1.38	34.88	32.07	17.35
Bandhan Infrastructure Fund	Sectoral Fund - Infrastructure	1934.06	0.82	33.96	34.37	19.21
Quant Infrastructure Fund	Sectoral Fund - Infrastructure	3990.92	0.66	33.34	41.29	20.98

Disclaimer: Please note that the above list is for educational purposes only, and is not recommendatory. Please do your own research or consult your financial advisor before investing.

Note: The data on the list is from 19th September 2024. This data is derived from the Tickertape Mutual Funds Screener.

• Plan: Growth
• 3Y CAGR: Sorted from Highest to Lowest
• 5Y CAGR: Positive (Set lower limit to 0)
• 10Y CAGR: Positive (Set lower limit to 0)

🚀 Pro Tip: You can use Tickertape’s Mutual Fund Screener to research and evaluate funds with over 50+ pre-loaded filters and parameters.

Overview of the Best Long Term Mutual Funds

Here is a brief overview of the best long term investments amongst funds:

SBI PSU Fund

SBI PSU Fund’s current net asset value (NAV) for its Growth option in the Regular plan stands at Rs. 35.57. The fund’s 1-yr return is 63.10%, and its 3-yr CAGR is 38.91%. The fund manages assets under management (AUM) worth Rs. 4851.11 cr. with an expense ratio of 0.72%. An exit load of 0.50% applies if units are redeemed within 30 days and there is no exit load if units are redeemed after 30 days.

Motilal Oswal Midcap Fund

Motilal Oswal Midcap Fund’s current net asset value (NAV) for its Growth option in the Regular plan stands at Rs. 119.81. The fund’s 1-yr return is 69.16%, 3-yr CAGR is 38.91% and 5-yr CAGR is 36.07%. The fund manages assets under management (AUM) worth Rs. 15940.06 cr. with an expense ratio of 0.60%. An exit load of 1.00% applies if units are redeemed within 1 year, and there is no exit load if units are redeemed after 1 year.

ICICI Pru Infrastructure Fund

ICICI Prudential Infrastructure Fund’s current net asset value (NAV) is Rs. 213.89 for the Growth option in its Regular plan. The fund’s 1-year return is 58.91%, 3-yr CAGR is 37.05%, 5-yr CAGR is 33.80%, and its 10-yr CAGR is 18.27%. The fund manages assets worth Rs. 6062.77 cr and has an expense ratio of 1.18%. An exit load of 1% applies if the fund is redeemed within 15 days, and there is no exit load if redeemed after 15 days.

HDFC Infrastructure Fund

HDFC Infrastructure Fund’s current net asset value (NAV) is Rs. 54.35 for the Growth option in its Regular plan. The fund’s 1-year return is 57.89%, 3-yr CAGR is 36.60%, 5-yr CAGR is 28.61%, and its 10-yr CAGR is 12.99%. The fund manages assets worth Rs. 2533.24 cr. and has an expense ratio of 1.11%. An exit load of 1% applies if the fund is redeemed within 30 days, and there is no exit load if redeemed after 30 days.

Invesco India PSU Equity Fund

Invesco India PSU Equity Fund has a net asset value (NAV) of Rs 76.27 for the Growth option under its Regular plan. The fund’s 1-yr return is 66.53%, 3-yr CAGR is 36.60%, 5-yr CAGR is 28.61%, and 10-yr CAGR is 12.99%. It manages assets under management (AUM) worth Rs. 1593.41 cr. and has an expense ratio of 0.76%. An exit load of 1% applies to redemptions within 1 year for units exceeding 10% of the investment. 

Nippon India Power & Infra Fund

Nippon India Power & Infra Fund’s current net asset value (NAV) for the Growth option of its Regular plan is Rs. 400.67. The fund’s 1-yr return is 62.17%, 3-yr CAGR is 40.16%, 5-yr CAGR is 33.58, and its 10-yr CAGR is 18.19%. The fund manages assets worth Rs. 7537.49 cr. with an expense ratio of 0.98%. An exit load of 1% applies if redeemed within one month.

DSP India T.I.G.E.R Fund

DSP India T.I.G.E.R. Fund – Regular Plan’s current net asset value (NAV) stands at Rs. 370.13 for its Growth option. The fund’s 1-yr return is 63.98%, 3-yr CAGR is 35.07%, 5-yr CAGR is 33.25%, and its 10-yr CAGR is 19.34%. The fund manages assets worth Rs. 5500.38 cr. with an expense ratio of 0.89%. Investors should note an exit load of 1% if redeemed within 12 months.

LIC MF Infra Fund

LIC MF Infrastructure Fund’s Growth option in its Regular plan currently has a net asset value of Rs 57.61. The fund’s 1-yr return is 74.27%, 3-yr CAGR is 34.88%, 5-yr 32.07%, and 10-yr CAGR is 17.35%. The fund manages assets under management worth Rs. 725.10 cr. Its expense ratio stands at 1.38%. An exit load of 1% is applicable for redemptions within 90 days exceeding 12% units of the investment.

Bandhan Infrastructure Fund

Bandhan Infrastructure Fund has a net asset value (NAV) of Rs. 64.31 for the Growth option under its Regular plan. The fund’s 1-yr return is 73.34%, 3-yr CAGR is 33.96%, 5-yr CAGR is 34.37%, and 10-yr CAGR is 19.21%. It manages assets under management (AUM) worth Rs. 1934.06 cr. and has an expense ratio of 0.82%. An exit load of 0.50% applies to redemptions within 30 days. 

Quant Infrastructure Fund

Quant Infrastructure Fund has a net asset value (NAV) of Rs. 45.96 for the Growth option under its Regular plan. The fund’s 1-yr return is 65.08%, 3-yr CAGR is 33.34%, 5-yr CAGR is 41.29%, and 10-yr CAGR is 20.98%. It manages assets under management (AUM) worth Rs. 3990.92 cr. and has an expense ratio of 0.66%. An exit load of 0.50% applies to redemptions on or within 30 days. 

How to Invest in Mutual Funds for Long Term?

Investing in long-term mutual funds involves several key steps for a smooth process:

1. Open a Demat and Trading Account: A demat account holds your shares electronically, while a trading account facilitates buying and selling. You can open these accounts with a bank, brokerage firm, or through smallcase.
2. Choose a Suitable Long Term Fund: From the variety of long-term mutual funds available, select the best mutual funds to invest in for long term based on your investment goals and risk tolerance.
3. Invest in the Fund: You can invest in your chosen fund through a bank, brokerage firm, or mutual fund house. You can opt for a lump sum investment or set up a systematic investment plan (SIP).
4. Monitor Your Investment: Regularly review your investment’s performance to ensure it continues to meet your objectives.

Following these steps will help you navigate investing in long-term mutual funds effectively.

What are Long Term Mutual Funds?

Long-term investments span over three years, with equity mutual funds and hybrid funds being the top choices in long term mutual funds. These long term funds generally provide higher growth than debt mutual funds and traditional investments. However, like all mutual funds, long-term mutual funds are subject to market risks and do not guarantee returns. Long term mutual fund investments are also typically highly volatile.

How do Long Term Investments Work?

Investors often choose long-term investments when they have surplus capital that they can leave invested for extended periods. Patience is crucial as holding periods can span decades. The power of compounding enables long-term assets to generate excellent returns. The longer the investment period, the higher the potential returns.

Retirement schemes are a common form of long-term investment, driven by the need for retirement planning. Starting early allows individuals ample time to build a substantial retirement fund through compounding. Long-term investments also allow investors to take on prudent risks, as market fluctuations and risks like inflation and downturns tend to balance out over time through rupee-cost averaging, ultimately leading to potentially higher overall returns

Features of the Best Mutual Fund For the Long Term

Long-term mutual funds offer distinct features that set them apart from short-term or mid-term investment options. Understanding these characteristics can help you learn how to select best mutual funds for the long term and make informed investment decisions when considering long-term financial goals:

• Long-Term Investment: Long-term mutual funds are ideal for those aiming to achieve significant goals such as retirement, a child’s education, or wedding expenses.
• Risk: Long-term mutual funds carry higher risks compared to short-term or medium-term funds. They are sensitive to interest rate fluctuations and face credit risk since they invest in government and corporate bonds over extended periods.
• Returns: Investing in long-term mutual funds can yield higher returns, potentially reaching double digits over time.

Advantages of Investing in the Best Mutual Fund For Long Term

Investing in a long-term mutual fund scheme presents a host of benefits, each catering to specific financial needs and objectives:

• Strategic Financial Planning: Long term investments necessitate strategic financial planning. By addressing future financial goals well in advance, investors lay a solid foundation for stress-free life goal achievements. With a clear roadmap, financial preparedness ensures a seamless journey toward their aspirations, backed by tools such as SIP and lumpsum mutual fund calculators for return estimation.

• Harnessing the Power of Compounding: The long term investment horizon introduces the powerful concept of compounding, where earnings build upon prior gains. Over spans of 5, 10, or 30 years, compounding significantly multiplies returns, and systematic investment plans (SIPs) further amplify this effect.
• Steady Management of Market Volatility: The best funds for long term investment take a nuanced approach to handling market volatility. Investors develop a deeper understanding of market dynamics and become less susceptible to short-term fluctuations. This leads to more stable and potentially higher returns over time.
• Lightening the Financial Load: Initiating investments early in life, particularly for substantial financial objectives like retirement, education, or marriage, eases the financial burden. Early investments leverage the power of compounding, reducing the rupee cost and enhancing the overall returns. Furthermore, they provide a more robust defence against the market’s short-term fluctuations.

How are Returns Calculated on Long Term Mutual Funds?

When evaluating the best mutual funds for long term to invest in India, understanding how returns are calculated is vital. Here’s a concise look at the process:

• Net Asset Value (NAV): NAV represents the fund’s per-unit market value. It’s calculated by deducting liabilities from the total asset value and dividing by the outstanding units. NAV is computed daily.
• Holding Period Returns: This metric assesses performance over a specific time frame. The formula is simple:

Holding Period Return (%) = [(Final NAV – Initial Investment) / Initial Investment] x 100

• Compounded Annual Growth Rate (CAGR): CAGR accounts for compounding effects, offering a more precise view of long-term performance. The formula is:

CAGR (%) = [(Ending NAV / Beginning NAV) ^ (1/n) – 1] x 100

• Total Returns: Consider all gains and income received, not just NAV appreciation. Divide this by your initial investment.
• Volatility and Risk-Adjusted Returns: Though not direct return calculations, these metrics assess a fund’s performance relative to risk levels. Sharpe ratio, Sortino ratio, and other measures offer insights.

Who Should Invest in Mutual Funds for the Long Term?

• Longer Investment Horizon: For those planning to keep money in the market for an extended period, mutual funds are an excellent choice. They are suitable for goals like buying a house or car, funding a child’s education or marriage, building a retirement corpus, or preparing for other future needs.
• Seeking High Returns, Not Immediate Gains: Long-term mutual funds allocate about 65% of investments into equities, which tend to yield higher returns as the market performs well over time. This makes them a strong option for significant growth in the investment corpus.
• Not Expecting Fixed Returns: Since these funds primarily invest in equities, they don’t offer fixed returns (for that, investors may consider debt funds). For those not needing regular income from their investments, long-term mutual funds can effectively grow money over time.

Risks of Investing in the Best Mutual Fund to Invest in Long Term

When considering long-term mutual funds for investment, evaluating the associated risks is essential. Here’s an overview of potential challenges you should be mindful of:

• Market-Linked Risks: Long-term mutual funds, including even the top balanced mutual funds, particularly those heavily invested in equities, are exposed to higher market-linked risks. The value of your investment can fluctuate significantly, influenced by the performance of the stocks within the fund. Having a good grasp of the stocks your chosen fund invests in is crucial.
• Return Uncertainty: Even the best MF for long term investment don’t offer guaranteed high returns. For example, even if your fund experiences a loss in one year but performs exceptionally well the following year, the overall yield may not be as impressive when averaged over your investment period.
• Redemption at Current NAV: While you can withdraw from long term investment plans in India, the redemption amount is determined based on the entire fund’s prevailing net asset value (NAV). If the fund faces losses, even if it is the best mutual fund for long term investments, these losses will be proportionally reflected in your investment corpus.

Taxation on the Best Mutual Funds for Long Term Growth as per the Union Budget 2024-25

The taxation on capital gains from your mutual fund investments are based on their holding periods and asset allocation. A few revisions were made to the tax rates, depending on their types, in the Union Budget 2024-25. In order to select the best mutual fund to invest for long term, it is important to learn about these revisions as well. They include:

Equity Mutual Funds

• Short-Term Capital Gains (STCG): The gains from equity mutual funds held for less than 12 months are now taxed at 20%. This is an increase from the previous tax rate of 15%.
• Long-Term Capital Gains (LTCG): For equity mutual funds held for over a period of over 12 months, gains are classified as long-term capital gains. The new budget introduces these key changes to the LTCG:

1. Tax-Free Limit: The capital gains up to Rs. 1.25 lakh per year are tax-free. This is an increase from the previous limit of Rs. 1 lakh.
2. Tax Rate: The gains on the best mutual funds to buy for long term exceeding Rs. 1.25 lakh are now taxed at a flat rate of 12.5%. This is an increase from the previous rate of 10%.
3. Indexation: The benefit of indexation, which allowed investors to adjust the purchase price for inflation, has been removed for all asset classes, including equity mutual funds.

Indexation was a method that allowed investors to adjust the purchase price of assets for inflation. This adjustment reduced taxable profits when selling assets like property or gold. Previously, these long-term capital gains were taxed at 20%. The new rule imposes a flat 12.5% tax on all long-term capital gains but eliminates any indexation benefits.

Capital Gains Tax	Holding Period	Old Rate	New Rate
Short-Term Capital Gains (STCG)	Less than 12 months	15%	20%
Long-Term Capital Gains (LTCG)	More than 12 months	10%	12.50%

Debt Mutual Funds

• Short-Term Capital Gains (STCG): If you sell your debt fund units within a period of 36 months, the gains are classified as short-term capital gains. The STCG will be taxed according to your income tax slab rate.
• Long-Term Capital Gains (LTCG): For debt funds held for a period over 36 months, the gains are classified as long-term capital gains. The new budget outlines a few changes on the LTCG for debt funds, including:

1. Tax Rate: A flat 12.5% tax rate applies to these gains.
2. No Indexation Benefit: The previous benefit of adjusting the purchase price for inflation is removed. Now, the entire gain after three years is taxable at 12.5%.

Capital Gains Tax	Holding Period	Old Rate	New Rate
Short-Term Capital Gains (STCG)	Less than 36 months	Taxed according to your income tax slab	Taxed according to your income tax slab
Long-Term Capital Gains (LTCG)	More than 36 months	10%	12.50%

Hybrid Mutual Funds

Short-Term Capital Gains (STCG)

The tax on short-term capital gains depends on the fund’s asset allocation when it comes to hybrid mutual funds. Here is a breakdown of STCG tax rates according to their asset allocation in hybrid funds:

• Equity-Oriented Hybrid Funds (more than 65% in equity): The gains from units sold within 12 months are taxed at 20%.
• Debt-Oriented Hybrid Funds (less than 65% in equity): The gains from units sold within three years are taxed according to your income tax slab.

Long-Term Capital Gains (LTCG)

The capital gains tax on hybrid mutual funds that extend the specified period (12 or 36 months) is known as long-term capital gain tax. The tax treatment under this condition is as follows:

• Equity-Oriented Hybrid Funds: The gains from units held for over a period of 12 months are taxed at 12.5%. The gains up to Rs. 1.25 lakh are tax-free.
• Debt-Oriented Hybrid Funds: The gains from units held for over a period of 36 months are taxed at 12.5% without indexation benefits. This means the entire gain is taxed at this rate, without adjustment for inflation.

Type of Hybrid  Fund	Short-Term Capital Gains (STCG)	Long-Term Capital Gains (LTCG)	Indexation Benefit
Equity-Oriented Hybrid Funds	20% for holdings less than 1 year	12.5% for holdings over 1 year, with gains up to Rs. 1.25 lakh tax-free	Not available
Debt-Oriented Hybrid Funds	Taxed as per income tax slab for holdings less than 3 years	12.5% for holdings over 3 years	Not available

Note: Mutual fund schemes where neither the equity nor debt orientation exceeds 65% will now be classified as long-term investments after 24 months. The previous holding period for these funds was 36 months. These will be taxed at the revised LTCG tax rate of 12.5%.

Differences Between Long and Short-Term Mutual Funds

The following table demonstrates a comparative analysis of long and short term investment options in mutual funds:

Aspects of Differences	Long Term Mutual Funds	Short Term Mutual Funds
Investment Horizon	Geared towards the long term, typically over several years.	Typically, it spans from a few days to three years.
Risk Tolerance	Suited for investors willing to undertake some risk, especially in equities.	Ideal for low-risk investors who prefer to avoid equities.
Wealth Creation	Long-term investments are effective for wealth creation over time.	Suitable for shorter-term financial objectives.
Goals	Ideal for retirement planning, purchasing a home, or funding children’s education.	Suitable for goals like vacations, vehicle purchases, or shorter-term financial milestones.
Investment Options	Focus on equity mutual funds, emphasising higher market exposure.	Primarily involve debt mutual funds, often surpassing fixed deposits in post-tax returns.
Taxation	Subject to capital gains taxation at the investor’s IT slab rate.	It is also subject to credit and interest rate risks and does not guarantee returns.
Liquidity	Usually less liquid as they are designed for long-term commitment.	More liquid, with options like liquid funds serving as alternatives to savings accounts.

Which Mutual Fund is Best for Long Term Investments?

Equity funds are commonly the popular choice for long term investors. Equity funds, including types of mutual funds like large caps, midcap funds, small cap mutual funds, value funds, multi-cap funds, and Equity Linked Savings Schemes (ELSS Funds), allocate at least 65% of their assets to equities or company shares. This provides a diversified approach for small investors to own shares in multiple companies. However, this ownership entails certain risks.

In the long term, companies tend to grow and stabilise, passing on the benefits to investors. Equity markets are highly sensitive, and fluctuations can be swift. While traders may leverage short-term market movements, equity mutual fund investors often rely on fund managers for decision-making; these funds can provide substantial returns in the long term due to factors like rupee-cost averaging. However, it is essential to conduct thorough research and conduct a financial advisor before determining which mutual fund is suitable for long term investments.

Factors to Consider When Choosing Long-Term Mutual Funds

There are several key factors to consider when making informed investment decisions when selecting long-term mutual funds. Here’s a breakdown of what to keep in mind:

• Investment Goals: You can begin by defining your investment objectives. Are you looking to build wealth for retirement, fund your child’s education, or achieve other financial goals? Understanding your purpose will help you in the mutual fund selection for a long term fund that is aligned with your objectives and builds the best mutual funds to invest for long term. 
• Risk Tolerance: It can be helpful to assess your risk tolerance. Long-term mutual funds can vary in risk levels. You can consider how comfortable you are with market fluctuations and choose the best mutual funds to invest in long term and ones that also match your risk profile.
• Fund Type: Long-term investment options in India, including long duration funds, come in various forms, such as equity, debt, hybrid, and more. Each type serves a distinct purpose. Ensure the fund type while choosing a mutual fund for long term that aligns with your investment goals and risk tolerance.
• Historical Performance: Review the fund’s historical performance. While past performance doesn’t guarantee future results, it can provide insights into how the fund has fared under different market conditions.
• Fund Manager Expertise: The fund manager plays a critical role in a fund’s performance. Investigate the track record and expertise of the fund manager managing the long-term fund you’re considering.
• Expense Ratio: The expense ratio impacts your returns. Lower expense ratios mean more of your investment goes toward generating returns. Compare expense ratios to make cost-effective choices.

To Wrap It Up…

In conclusion, long-term mutual funds offer an effective strategy for investors with specific long-term financial goals and risk appetites. Their potential for higher returns, coupled with the power of compounding, makes them an attractive choice for those willing to commit for the long term. However, aligning these funds with your financial objectives and carefully assessing your risk tolerance is crucial. Whether you’re planning for retirement, your child’s education, or simply looking to harness the benefits of compounding, long-term mutual funds may be a valuable addition to your investment portfolio. However, it is always recommended for investors to consult a financial advisor and conduct thorough research before investing.

Most Popular Mutual Funds:

As an investor to have a diversified mutual funds portfolio, you might also like to know more about these different types of funds for investing –

Large Cap Mutual Funds	Mutual Fund Bulk Deals	SBI Mutual Funds for SIP	SBI MF for Long Term SIP	Sectoral Mutual Funds	Short Term Mutual Funds	Tax Saving Mutual Funds	Mid Cap Mutual Funds
Small Cap Mutual Funds	Pharma Mutual Funds	80c Mutual Funds	1 Year Mutual Funds	International Mutual Funds	Tata Mutual Funds	Mutual Fund Portfolio	Best Mutual Funds
High Risk Mutual Funds	Micro Cap Mutual Funds	AMCs	MNC Mutual Funds	Equity Mutual Funds	Overnight Funds	ICICI Pru Mutual Funds	HDFC Mutual Funds
Best Investment Plans	Fixed Income Mutual Funds	Penny Stock Mutual Funds	Retirement Mutual Funds	Floater Rate Funds	Aggressive Hybrid Funds	Multi Asset Allocation Funds	Children’s Funds
Medium Duration Funds	Debt Funds	Corporate Bonds	Ultra Short Term Funds	Value Funds	Contra Funds	Focused Funds	Funds of Funds
Money Market Funds	Arbitrage Funds	Gold Mutual Funds	Books on Mutual Funds	Best Mutual Funds for SIP	SBI Mutual Funds	Low Risk Mutual Funds	Dividend Paying Funds
Long Term Mutual Funds	Banking Mutual Funds	Gilt Funds	Mutual Funds for 10 Years	Monthly Income Mutual Funds	Nifty 50 Index Funds	Lumpsum Investment Funds	Blue Chip Mutual Funds
Low Expense Ratio Funds

Frequently Asked Questions (FAQs) on Long Term Mutual Funds