Equity mutual funds riding PSU, infrastructure, and mid-cap themes delivered stellar returns in 2025, far outpacing traditional large-cap portfolios. As investors plan their mutual fund strategy for 2026, reviewing these top performers offers useful insights into risk, opportunity, and portfolio construction.

This article highlights six high-return schemes across PSU, infrastructure, mid-cap, large & mid-cap, and large-cap categories, along with practical pointers on how such funds can fit into a long-term portfolio. The objective is to educate investors, not to offer direct buy or sell recommendations.

Performance Snapshot Of Top Funds


These figures show how thematic and mid-cap funds can dramatically outperform broader indices during bullish phases, especially when sectors like PSUs and infrastructure are in favour. At the same time, such performance comes with elevated volatility, making it vital for investors to understand category-specific risks.

PSU Power Play: Why SBI PSU Fund Stole The Show

The SBI PSU Fund, a focused thematic scheme, leads the pack with an impressive 62 percent YTD return, fuelled by a sharp re-rating of public sector undertakings across banking, energy, capital goods, and infrastructure. Rising government capex, improved profitability, and strong dividend potential in many PSUs have attracted both institutional and retail money into this space.

However, PSU funds are inherently concentrated: performance is tightly linked to policy direction, sector cycles, and market sentiment toward government-owned companies. That makes them suitable as satellite allocations for seasoned investors who can tolerate sharp ups and downs, rather than as the core of a conservative portfolio.

Betting On India's Build-Out: ICICI Pru Infrastructure Fund

The ICICI Pru Infrastructure Fund, with a 58 percent YTD return, reflects the market's optimism on India's long-term infrastructure growth story. This category usually invests in companies involved in construction, power, engineering, transport, and related services, all of which benefit from sustained government and private investment in the economy's physical backbone.

Infrastructure-oriented schemes can offer strong upside when capex cycles accelerate, but they also remain vulnerable to project delays, policy changes, and interest-rate trends. Investors considering such funds should have a multi-year horizon and be prepared for periods of underperformance when markets rotate away from the theme.

Mid-Cap Momentum: Nippon India Growth And Motilal Oswal Midcap

Mid-cap funds like Nippon India Growth Fund (39 percent YTD) and Motilal Oswal Midcap Fund (37 percent YTD) benefited from strong earnings growth and re-rating in quality mid-sized businesses. Mid-caps typically sit in the sweet spot between small-cap risk and large-cap stability, offering higher growth potential as companies scale up.

At the same time, mid-cap indices can correct sharply during risk-off phases or economic slowdowns, making these funds appropriate for investors with higher risk appetite and at least a 7 to 10 year time horizon. For many portfolios, mid-cap exposure works best as a return-enhancing satellite allocation rather than the only equity holding.

Core Stability: HDFC Top 100 And SBI Blue-chip

While thematic and mid-cap schemes dominated headlines, diversified categories like Large & Mid-Cap and Large-Cap funds also posted robust returns. HDFC Top 100 Fund (31 percent YTD) allocates to both large-cap and mid-cap names, blending stability from market leaders with growth from emerging franchises.

SBI Blue-chip Fund (29 percent YTD) focuses on established large-cap companies, which tend to be more resilient in volatile markets and often form the backbone of long-term portfolios. These relatively diversified categories are often better suited as core holdings for most investors compared to highly focused PSU or infrastructure themes.

2026 Game Plan: How To Use Such Funds Smartly

Instead of chasing last year's toppers blindly, investors can use these categories intelligently while building a diversified 2026 mutual fund portfolio.

  • Use large-cap and large & mid-cap funds as the main foundation, especially for conservative or first-time investors.
  • Add mid-cap funds in moderation for long-term growth, keeping the combined exposure aligned with risk tolerance.
  • Treat PSU and infrastructure funds as tactical or thematic bets with limited allocation, reviewing them regularly for concentration risk.
  • Prefer SIPs to stagger investments and reduce the impact of short-term volatility in cyclical segments.
The right mix varies by age, goals, income stability, and investment horizon, making personalized planning crucial.

Disclaimer: This post is for informational and educational purposes only and does not constitute investment, tax, or legal advice. Mutual fund investments are subject to market risks; read all scheme-related documents carefully before investing.




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