Top 4 Equity Mutual Funds for Your 2026 SIP Watchlist

Nov 22, 2025

With 2026 around the corner, the Indian equity market is standing at an interesting crossroads. On one hand, the last couple of years have delivered strong equity returns supported by steady domestic growth, rising corporate earnings, and a surge of retail participation.

On the other side, valuations across many segments have become rich and global cues remain uncertain. Investors have been learning to cope with sharper market swings.

It is here that SIPs have emerged as the prudent way for investors to participate in equities without getting trapped by short-term volatility.

Even during market corrections, domestic SIP flows have shown resilience, underscoring that investors are no longer reacting emotionally to every market dip but are beginning to understand the power of staying invested and compounding through cycles.

This change in mindset-from ‘timing the market’ to ‘time in the market’ is redefining the way equity mutual funds are being used for long-term wealth creation.

A well-chosen SIP portfolio in 2026 will be able to capture the long-term growth while still managing near-term volatility.

Against this backdrop, the task of identifying the right equity mutual funds for SIP becomes crucial.

Investors should look for consistent returns, quality of the portfolio, risk control, and an ability of the fund to deliver across multiple market cycles.

In this editorial, we have showcased the Top 4 Equity Mutual Funds for Your 2026 SIP Watchlist, funds that really stand out for their sustained historical performance, disciplined portfolio construction, and strong risk-adjusted returns across market cycles.

#1 Nippon India Small Cap Fund

Nippon India Small Cap Fund is one of the most widely followed small-cap schemes known for its ability to identify early-stage businesses with the potential to scale meaningfully over time.

The fund follows a bottom-up, research-intensive approach. Its investment philosophy is driven by the belief that long-term wealth creation often stems from catching businesses at an inflection point – when fundamentals start turning and growth visibility begins improving.

Unlike typical small-cap portfolios that chase momentum, this fund focuses on companies with improving governance practices, robust cash-flow visibility, sustainable business models, and niche competitive advantages.

While the fund naturally carries higher volatility, given its strong small-cap orientation, its performance over multiple cycles has been supported by broad-based diversification, typically holding a large basket of businesses across industries.

Some of the meaningful allocations lie in key holdings such as Multi Commodity Exchange of India (2.5%), HDFC Bank (1.9%) and SBI (1.4%). Sectors such as capital goods (11.4%), healthcare (8.6%) and FMCG (7.5%), are the top holdings.

From a performance standpoint, historically, Nippon India Small Cap Fund’s SIP returns have tended to smoothen out the volatility associated with the small-cap universe.

Nippon India Small Cap Fund, in the last 10 years, has delivered an XIRR or SIP return of 23.64% compared to 18.33% by its benchmark, the Nifty Smallcap 250 – TRI.

Nippon India Small Cap Fund – 10 Year SIP

Source: ACE MF

A monthly SIP of Rs 10,000 in the fund over 10 years, i.e., a total investment of Rs 1.2 million (m), would now be valued at Rs 4.2 m.

#2 Motilal Oswal Midcap Fund

Motilal Oswal Midcap Fund is built around a focused philosophy of identifying mid-sized companies that are in the middle of structural growth, backed by strong industry positioning and improving financial strength.

The fund’s approach rests on a clear objective: to capture businesses that are transitioning into leadership roles within their respective sectors as they benefit from rising market share, operating leverage, and expansion into newer geographies or product categories.

Unlike diversified strategies that spread too thin across themes, this fund maintains a high-conviction, relatively concentrated portfolio. The idea is to avoid chasing short-term momentum and instead back companies with long-term competitive advantages across sectors.

The fund’s portfolio’s top picks are Persistent Systems (9.5%), Coforge (9.3%), and One97 Communications (8.7%). Sector-wise the fund holds high allocation in sectors like IT (27.5%), retail (14.7%), and electricals (14.3%).

In terms of long-term performance, Motilal Oswal Midcap Fund has benefited from holding companies early in their growth cycle and allowing them the runway to mature.

Motilal Oswal Midcap Fund – 10 Year SIP

Source: ACE MF

A monthly SIP of Rs 10,000 in the fund over 10 years, i.e., a total investment of Rs 1.2 m would now be valued at Rs 4 m.

#3 Parag Parikh Flexi Cap Fund

Parag Parikh Flexi Cap Fund is one of the popular schemes in flexicap category, known for its patient investing style and its ability to navigate markets through disciplined asset allocation.

The fund follows a value-conscious, globally diversified approach, which differentiates it from most traditional flexi-cap funds that stay predominantly domestic.

Its philosophy prioritises buying fundamentally strong businesses at sensible valuations and holding them long enough for intrinsic value to unfold.

At the heart of this strategy is a high-quality stock selection framework. The fund’s research process focuses on companies with durable competitive advantages, sustainable profitability, prudent capital allocation, and management teams with proven integrity.

One of the fund’s strengths is its ability to blend domestic and international exposure.

By allocating a portion of its assets to global giants-typically those in technology, consumer, and niche sectors the fund adds a layer of diversification to reduce dependence on India-specific cycles.

Domestically, the portfolio tends to lean toward businesses like – HDFC Bank (8%), Power Grid Corporation of India (6%) and Bajaj Holdings & Investments (5.2%), spanning sectors such as banking (30.9%), IT services (9.9%), and automobiles (7.7%).

The fund avoids excessive diversification and instead maintains a portfolio where each holding plays a meaningful role in long-term value creation.

It offers the flexibility to invest across market caps, incorporates global diversification, and follows a prudent, valuation-aware philosophy that potentially aligns well with long-term wealth creation.

Parag Parikh Flexi Cap Fund – 10 Year SIP

Source: ACE MF

A monthly SIP of Rs 10,000 in the fund over 10 years, i.e., a total investment of Rs 1.2 m, would now be valued at Rs 3.5 m.

#4 Nippon India Large Cap Fund

Nippon India Large Cap Fund is a stability-driven equity scheme that focuses on established market leaders with strong fundamentals, proven business models, and the ability to deliver consistent earnings across economic cycles.

The fund aims to create a dependable core equity portfolio by investing predominantly in companies within the top 100 by market capitalisation businesses that are well-positioned to withstand volatility and benefit from India’s long-term growth trajectory.

This allows the manager to participate in high-quality growth opportunities while still maintaining a valuation-conscious framework. The idea is to back businesses with predictable earnings, long-term demand visibility, and a strong competitive edge.

As a result, the portfolio tends to include companies that have a history of navigating economic cycles and emerging stronger during recoveries. Key holdings are HDFC Bank (8.4%), RIL (6.2%), and ICICI Bank (4.5%).

By sticking to established leaders and avoiding high concentration in speculative themes, the fund aims to reduce drawdowns and maintain a smoother return trajectory.

Its allocation strategy strikes a balance between cyclical sectors that benefit from economic expansion and defensives that help cushion volatility. The fund leans towards sectors like bank (23.6%), automobile & ancillaries (8%), and FMCG (7.2%).

Nippon India Large Cap Fund – 10 Year SIP

Source: ACE MF

A monthly SIP of Rs 10,000 in the fund over 10 years, i.e., a total investment of Rs 1.2 m would now be valued at Rs 3 m.

Conclusion

The key takeaway while investors chalk out their SIP strategy for 2026 is to ensure the selection of the right fund in accordance with personal goals, risk appetite, and investment horizon, rather than considering only recent performance or market sentiment.

Equity markets will continue their cyclical movement, and each of the funds discussed brings varied strengths to the table: large caps for stability, mid and small caps for higher long-term growth potential, while flexi-cap funds bring in diversification and adaptability.

SIP investments work best when investors remain disciplined through market phases. Rather than getting perturbed by short-term volatility, the focus should be on building a portfolio that could compound over the next 5-10 years.

At its core, investing via SIPs is not about finding the ‘best’ fund at any moment-it’s about selecting consistent and well-managed funds and giving them enough time for compounding to work.

In 2026, the strategy toward the accumulation of sustainable wealth would be adhering to a disciplined SIP plan, selecting funds allied with financial goals, and minimising frequent changes.

Invest wisely.

Happy investing.

Table Note: Data as of November 21, 2025
The securities quoted are for illustration only and are not recommendatory
Past performance is not an indicator for future returns.
Returns are on rolling CAGR basis and in %. Direct Plan-Growth option.
Those depicted over 1-Yr are compounded annualised.
Risk ratios are calculated over a 3-year period assuming a risk-free rate of 6% p.a.

Disclaimer: This write up is for information purpose and does not constitute any kind of investment advice or a recommendation to Buy / Hold / Sell a fund. Returns mentioned herein are in no way a guarantee or promise of future returns. As an investor, you need to pick the right fund to meet your financial goals. If you are not sure about your risk appetite, do consult your investment consultant/advisor. Mutual Fund Investments are subject to market risks, read all scheme related documents carefully. Registration granted by SEBI, enlistment as IA with Exchange and certification from NISM no way guarantee performance of the intermediary or provide any assurance of returns to investors.