You're earning in dirhams, living in the UAE, and thinking about your future in India. Maybe it's retirement. Maybe it's your child's education. Or maybe you just want your money to work harder than a savings account ever could.
We get this question every week in our Belong WhatsApp community: "Which mutual fund should I start a SIP in?"
Here's the thing. There's no single "best" fund. The right fund depends on your goals, timeline, and how much market volatility you can stomach.
But after helping thousands of NRIs build their India portfolios through Belong, we've identified clear winners across different categories.
This guide breaks down our top picks for 2025, with real performance data, NRI eligibility rules, and practical steps to start investing from the UAE.
What is a SIP and Why Does It Work for NRIs?
A Systematic Investment Plan (SIP) lets you invest a fixed amount every month into a mutual fund. Think of it as a financial EMI, except instead of paying off a loan, you're building wealth.
For NRIs, SIPs solve two major problems.
First, you don't need to time the market. When you're busy with work in Dubai or Abu Dhabi, you can't track Sensex movements daily. SIPs automate your investing.
Second, you benefit from rupee cost averaging. Your Rs 10,000 monthly SIP buys more units when markets dip and fewer when markets peak. Over time, this averages out your cost and reduces risk.
Here's how it works in practice:
Month | NAV | Units Purchased |
|---|---|---|
January | Rs 100 | 100 units |
February | Rs 80 | 125 units |
March | Rs 110 | 91 units |
Total | Average: Rs 94.34 | 316 units |
Your average cost per unit (Rs 94.34) is lower than the simple average of NAVs (Rs 96.67). This automatic averaging works beautifully for NRIs dealing with both INR fluctuations and market cycles.
👉 Tip: Start with Rs 5,000-10,000 monthly. You can always increase later through step-up SIPs when your income grows.
Top SIP Mutual Funds for NRIs in 2025: Category-Wise Picks
We've ranked funds based on 5-year returns, consistency, expense ratio, and fund manager track record. All data is from December 2025.
Best Large Cap Funds for Conservative NRIs
Large cap funds invest in India's top 100 companies by market capitalisation. Think Reliance, HDFC Bank, Infosys. These are stable, established businesses with lower volatility.
Fund Name | 5-Year Return | Expense Ratio | Min SIP | AUM |
|---|---|---|---|---|
Nippon India Large Cap Fund | 21.39% | 0.7% | Rs 100 | Rs 50,312 Cr |
ICICI Prudential Large Cap Fund | 19.3% | 0.8% | Rs 100 | Rs 78,160 Cr |
HDFC Large Cap Fund | 18.05% | 1.0% | Rs 100 | Rs 40,618 Cr |
Nippon India Large Cap Fund stands out with 21.39% annualised returns over 5 years. The fund maintains heavy exposure to financials, IT, and consumer goods. Fund manager Sailesh Raj Bhan has managed this fund since 2007, giving him experience across multiple market cycles.
Large cap funds suit NRIs who:
- Have a 5-7 year investment horizon
- Want steady growth with lower risk
- Are building a core portfolio allocation
👉 Tip: Use our NRI FD Comparison Tool to compare how large cap SIP returns stack up against fixed deposit rates.
Best Flexi Cap Funds for Balanced Growth
Flexi cap funds can invest across large, mid, and small cap stocks. The fund manager decides the allocation based on market conditions. This flexibility often translates to better risk-adjusted returns.
Fund Name | 5-Year Return | Expense Ratio | Min SIP | AUM |
|---|---|---|---|---|
Parag Parikh Flexi Cap Fund | 20.99% | 0.71% | Rs 1,000 | Rs 1,29,783 Cr |
HDFC Flexi Cap Fund | 20.84% | 1.35% | Rs 500 | Rs 94,069 Cr |
ICICI Prudential India Equity FOF | 25.6% | 0.8% | Rs 500 | N/A |
Parag Parikh Flexi Cap Fund is a favourite among NRIs for good reason. It invests up to 35% in international stocks like Alphabet, Microsoft, and Amazon. This global diversification is unique among Indian funds.
The fund delivered 20.99% over 5 years with an expense ratio of just 0.71%, well below the category average of 2.03%. For NRIs who want India exposure with some international diversification, this is a strong choice.
If you're exploring global diversification options, check out our guide on GIFT City mutual funds which offer another route to international investing.
👉 Tip: Flexi cap funds work best with a 7+ year horizon. The fund manager needs time to rotate between market caps effectively.
Best Mid Cap Funds for Growth-Oriented NRIs
Mid cap funds invest in companies ranked 101-250 by market capitalisation. These are past the startup phase but still have significant growth runway. Higher risk, but historically higher returns.
Fund Name | 5-Year Return | Expense Ratio | Min SIP | AUM |
|---|---|---|---|---|
Motilal Oswal Midcap Fund | 30.52% | 0.57% | Rs 500 | N/A |
Edelweiss Mid Cap Fund | 28.1% | N/A | Rs 100 | N/A |
HDFC Mid Cap Opportunities | 27.44% | N/A | Rs 100 | N/A |
Source: Groww
Motilal Oswal Midcap Fund has delivered exceptional 30.52% returns over 5 years. The fund runs a concentrated portfolio of 25-30 high-conviction stocks. This focused approach amplifies returns but also increases volatility.
Mid cap funds suit NRIs who:
- Have 10+ year investment horizons
- Can tolerate 30-40% drawdowns in bad years
- Want to build aggressive wealth
We recommend mid caps as a secondary allocation, not your entire portfolio. Learn about asset allocation strategies for NRIs to balance risk properly.
Best Small Cap Funds for Aggressive Investors
Small cap funds invest in companies ranked 251 and below. These are emerging businesses with high growth potential but also high volatility. Small caps have historically been the biggest wealth creators over 15+ year periods.
Fund Name | 5-Year Return | Expense Ratio | Min SIP | AUM |
|---|---|---|---|---|
Quant Small Cap Fund | 31% | N/A | Rs 1,000 | N/A |
Nippon India Small Cap Fund | 28.39% | N/A | Rs 100 | N/A |
Invesco India Smallcap Fund | 27.89% | 0.40% | Rs 500 | N/A |
Bandhan Small Cap Fund | 27.85% | N/A | Rs 100 | N/A |
Quant Small Cap Fund topped the category with 31% returns over 5 years. The fund uses a quantitative approach with less human bias in stock selection. However, it's also among the most volatile funds.
Invesco India Smallcap Fund offers a more balanced approach with a low expense ratio of 0.40%. This cost efficiency adds up significantly over long holding periods.
👉 Tip: Limit small cap allocation to 10-15% of your equity portfolio. Read our guide on small cap funds for NRIs for detailed allocation strategies.
Best Large & Mid Cap Funds for the Middle Ground
Can't decide between stability and growth? Large & mid cap funds give you both. SEBI mandates they hold at least 35% each in large and mid cap stocks.
Fund Name | 5-Year Return | Expense Ratio | Min SIP |
|---|---|---|---|
ICICI Prudential Large & Mid Cap | 23.92% | N/A | Rs 100 |
Invesco India Large & Mid Cap | 21.61% | N/A | Rs 100 |
SBI Large & Midcap Fund | 20.52% | N/A | Rs 100 |
Source: Groww
ICICI Prudential Large & Mid Cap Fund delivered 23.92% over 5 years, striking an excellent balance. It's managed by Ihab Dalwai and Anand Sharma, who have navigated multiple market cycles effectively.
This category works well as a core holding for NRIs who want market-beating returns without extreme volatility.
Which Mutual Fund Category Should You Choose?
Your fund selection depends on three factors: investment horizon, risk appetite, and financial goals.
By Investment Horizon
Timeline | Recommended Category | Why |
|---|---|---|
3-5 years | Large Cap, Hybrid | Lower volatility, more predictable |
5-7 years | Flexi Cap, Large & Mid Cap | Balanced growth and stability |
7-10 years | Mid Cap | Time to recover from volatility |
10+ years | Small Cap | Maximum compounding potential |
By Risk Appetite
Conservative: Stick with large cap and hybrid funds. Expect 12-15% long-term returns with 15-20% maximum drawdowns.
Moderate: Flexi cap and large & mid cap funds. Expect 15-18% returns with 25-30% drawdowns possible.
Aggressive: Add mid and small cap funds. Expect 18-25% returns but prepare for 40-50% drawdowns in bad years.
By Financial Goal
Retirement corpus: Use a mix of large cap (50%) + flexi cap (30%) + mid cap (20%). Shift to more conservative allocation as you near retirement.
Child's education (10+ years away): Mid cap and small cap funds can maximise growth. Gradually shift to large cap as the goal approaches.
Emergency fund: Don't use equity funds. Keep 6-12 months expenses in NRE savings accounts or liquid funds.
For a structured approach, explore our five-layer framework for investments.
Can NRIs from USA and Canada Invest in Indian SIPs?
This is where things get complicated. Due to FATCA (Foreign Account Tax Compliance Act), many Indian fund houses don't accept investments from US and Canada-based NRIs.
FATCA requires financial institutions to report accounts of US persons to the IRS. The compliance burden is high, so most AMCs simply refuse US/Canada investors.
AMCs That Accept US/Canada NRIs (2025)
AMC | Online Investment | Notes |
|---|---|---|
SBI Mutual Fund | Yes | Full online access |
ICICI Prudential | Limited | May require physical presence for some funds |
HDFC Mutual Fund | Limited | SIP and lumpsum if done from India |
UTI Mutual Fund | Yes | Online access available |
Franklin Templeton | Yes | With additional documentation |
Motilal Oswal | Limited | Lumpsum only from abroad |
DSP Mutual Fund | US only | Physical presence required |
Sundaram Mutual Fund | Yes | Case by case |
Source: Zerodha Z-Connect, Groww
👉 Tip: Before moving to the US or Canada, front-load your Indian SIP investments. Continuing existing SIPs is easier than starting new ones.
Alternative for US/Canada NRIs: GIFT City
If you're in the US or Canada, consider GIFT City investments. GIFT City operates under IFSC regulations, not regular Indian regulations, and doesn't have the same FATCA restrictions for USD investments.
Through Belong, you can invest in GIFT City mutual funds with zero capital gains tax for NRIs. No NRE/NRO account needed, and you invest directly in USD.
Explore GIFT City mutual funds or compare them with regular mutual funds.
How to Start a SIP from the UAE: Step-by-Step
Step 1: Open an NRE or NRO Account
You need an Indian bank account to invest. NRE accounts are better for repatriable investments, NRO for non-repatriable.
Most major banks offer online account opening for UAE residents: HDFC NRI account, ICICI NRI account, and SBI NRI account.
Compare features and charges on our best NRI account guide.
Step 2: Complete Your KYC
Mutual fund KYC requires:
- Passport copy (self-attested)
- Overseas address proof (utility bill, bank statement, rental agreement)
- Indian address proof (Aadhaar, voter ID)
- PAN card
- Recent photograph
Video KYC (V-KYC) is now available from many AMCs, so you don't need to visit India. Use our Compliance Compass to check your documentation status.
Step 3: Verify Your Residential Status
Use our Residential Status Calculator to confirm you qualify as NRI. This determines your tax treatment and account requirements.
Understanding NRI vs RNOR status is crucial for tax planning.
Step 4: Choose Your Funds
Based on your goals and timeline, select 3-4 funds across categories. Avoid over-diversification. Eight to ten funds dilute returns without reducing risk meaningfully.
A simple starter portfolio:
Category | Fund | Allocation |
|---|---|---|
Large Cap | Nippon India Large Cap | 40% |
Flexi Cap | Parag Parikh Flexi Cap | 35% |
Mid Cap | HDFC Mid Cap Opportunities | 25% |
Step 5: Set Up Auto-Debit
Link your NRE/NRO account for automatic monthly deductions. Most platforms support ECS/NACH mandates. Choose a date after your salary typically hits your account.
Step 6: Monitor Quarterly, Not Daily
Check your portfolio quarterly. Annual rebalancing is enough. Don't panic during market corrections, that's when SIPs work hardest.
👉 Tip: Set up a step-up SIP that increases your investment by 10% annually. This aligns with typical salary growth and accelerates wealth building.
Tax Implications of Mutual Fund SIPs for NRIs
Understanding taxation is crucial. Unlike NRE fixed deposits which are tax-free in India, mutual fund gains are taxable.
Capital Gains Tax (2025 Rules)
Fund Type | Holding Period | Tax Rate | TDS |
|---|---|---|---|
Equity (Large/Mid/Small/Flexi Cap) | Less than 12 months | 20% (STCG) | Yes |
Equity | More than 12 months | 12.5% above Rs 1.25 lakh (LTCG) | Yes |
Debt Funds | Any period | As per income tax slab | Yes |
Source: Finance Act 2024
Important: TDS is deducted at source for NRIs. You can't avoid it like resident Indians can with threshold exemptions.
DTAA Benefits
If you're in the UAE, the India-UAE DTAA can help you avoid double taxation. You'll need a Tax Residency Certificate (TRC) from UAE to claim benefits.
For detailed guidance, read our complete DTAA guide and how to claim DTAA benefits.
Tax Filing Requirements
Even if you have no other India income, mutual fund gains require ITR filing. Learn about NRI tax filing and common filing mistakes to avoid.
Consider using Belong's NRI tax filing service for hassle-free compliance.
SIP vs Lumpsum: Which is Better for NRIs?
This debate never ends. Here's our take based on market research and client experience.
Choose SIP when:
- You have regular income (monthly salary)
- You're investing for 5+ years
- You can't time the market (who can?)
- You want to build discipline
Choose lumpsum when:
- You received a bonus or end-of-service benefits
- Markets have crashed 20%+ (buy the dip)
- You have idle funds in savings account earning little
- Investment horizon is 10+ years
For most NRIs, a combination works best. Start SIPs for regular investing, add lumpsum during market corrections.
Read our detailed comparison: SIP vs Lumpsum for UAE NRIs.
Common SIP Mistakes NRIs Make
After advising thousands of NRIs, we've seen these errors repeatedly.
1. Stopping SIPs During Market Crashes
This is the worst thing you can do. Market dips are when SIPs buy more units cheaply. The NRIs who stayed invested through 2020's COVID crash saw exceptional returns by 2022.
2. Chasing Last Year's Top Performers
A fund that returned 50% last year might return 5% this year. Look at 5-year and 10-year track records, not recent performance.
3. Over-Diversifying
Holding 15-20 funds doesn't reduce risk. It just creates a closet index fund with higher expenses. Three to five funds across categories is optimal.
4. Ignoring Expense Ratios
A 1% higher expense ratio compounds significantly over 20 years. Always choose direct plans over regular plans, the savings add up.
5. Not Updating KYC When Status Changes
If you return to India, your status changes from NRI to RNOR and eventually to resident. Update your AMCs and bank accounts promptly to avoid compliance issues.
Learn more about converting NRI accounts when returning.
Building a Sample SIP Portfolio: Three Scenarios
Scenario 1: Conservative NRI (Age 45+, Retiring in 10 Years)
Fund | Monthly SIP | Category | Allocation |
|---|---|---|---|
Nippon India Large Cap | Rs 15,000 | Large Cap | 50% |
HDFC Balanced Advantage | Rs 9,000 | Hybrid | 30% |
SBI Large & Midcap | Rs 6,000 | Large & Mid Cap | 20% |
Total | Rs 30,000 | 100% |
Expected corpus in 10 years at 12% return: Rs 69.6 lakh
Scenario 2: Moderate NRI (Age 35, 15-Year Horizon)
Fund | Monthly SIP | Category | Allocation |
|---|---|---|---|
Parag Parikh Flexi Cap | Rs 10,000 | Flexi Cap | 40% |
ICICI Pru Large & Mid Cap | Rs 7,500 | Large & Mid Cap | 30% |
Motilal Oswal Midcap | Rs 7,500 | Mid Cap | 30% |
Total | Rs 25,000 | 100% |
Expected corpus in 15 years at 14% return: Rs 1.25 crore
Scenario 3: Aggressive NRI (Age 28, 20-Year Horizon)
Fund | Monthly SIP | Category | Allocation |
|---|---|---|---|
HDFC Flexi Cap | Rs 6,000 | Flexi Cap | 30% |
Motilal Oswal Midcap | Rs 6,000 | Mid Cap | 30% |
Nippon India Small Cap | Rs 4,000 | Small Cap | 20% |
Parag Parikh Flexi Cap | Rs 4,000 | Flexi Cap | 20% |
Total | Rs 20,000 | 100% |
Expected corpus in 20 years at 16% return: Rs 2.76 crore
👉 Tip: These are illustrations. Actual returns depend on market performance. Use step-up SIPs to increase contributions annually.
Why GIFT City Mutual Funds Are Gaining Popularity Among NRIs
While traditional Indian mutual funds work well, GIFT City offers unique advantages for NRIs.
Zero capital gains tax: Unlike regular mutual funds taxed at 12.5-20%, GIFT City gains are tax-free for NRIs.
USD investing: No currency conversion needed. Invest and redeem in dollars, avoiding INR volatility.
No NRE/NRO required: Simplified process without Indian bank account dependency.
Global diversification: Access to international funds domiciled in India's IFSC.
Explore options like DSP Global Equity Fund or Tata India Dynamic Equity Fund through our GIFT City Mutual Funds Explorer.
Compare GIFT City FDs vs Bank FDs to understand the broader ecosystem.
Final Thoughts: Start Today, Not Tomorrow
The best time to start a SIP was ten years ago. The second best time is today.
Markets will always have uncertainty. Interest rates will fluctuate. Currency will move. But disciplined SIP investing smooths out all this noise over the long term.
At Belong, we've seen NRIs transform their financial futures through consistent SIP investments. The ones who start early and stay invested, regardless of market conditions, always come out ahead.
Your next steps:
- Determine your risk profile and investment horizon
- Select 3-4 funds from our recommendations above
- Open an NRE/NRO account if you don't have one
- Start with an amount you can commit to for at least 5 years
- Set up auto-debit and forget about it
Have questions about which funds suit your situation? Join our Belong WhatsApp community where many NRIs discuss their investment strategies daily.
Or download the Belong app to explore GIFT City mutual funds with zero capital gains tax, perfect for NRIs looking to maximise returns.
Sources
- Groww - Best Large Cap Mutual Funds
- Groww - Best Flexi Cap Mutual Funds
- Groww - Best Mid Cap Mutual Funds
- Groww - Best Small Cap Mutual Funds
- Scripbox - Best Large Cap Mutual Funds
- Zerodha Z-Connect - US Canada NRI Mutual Funds
- INDmoney - Small Cap Funds
- SBI Mutual Fund - SIP
- SEBI - Mutual Fund Categorization
- Income Tax India
