Best Mutual Funds to Invest in 2026

Mutual funds remain one of the most practical investment tools for individuals who want exposure to financial markets without the burden of picking individual securities. 

By pooling capital and handing investment decisions to professional fund managers, investors gain instant diversification across equities, bonds, treasury bills, or other assets.

This structure works for both small and large investors. Losses in one asset class can be offset by gains in another, helping to smooth returns and reduce overall risk. 

But while mutual funds simplify investing, they are not all created equal. Performance, strategy, and management quality vary widely and those differences matter even more as investors position themselves for 2026.

The insights in this article are based on historical performance up to 2025, using data from the SEC CIS Valuation Report as of November 28, 2025. 

These figures provide useful guidance, but they are not guarantees. Market conditions will evolve in 2026, and returns may differ. Investors should treat this as a framework for decision-making, not a promise of outcomes.

How mutual funds performed heading into 2026

According to the SEC CIS Valuation Report, the average return across 14 mutual funds stood at 25.75% as of late 2025. While that is respectable, it significantly lagged the broader equity market. 

The NGX All-Share Index returned over 51%, highlighting a key reality: only certain categories of mutual funds truly captured the market rally.

Equity-based mutual funds were the clear winners, delivering an average return of about 50.56%, closely tracking the stock market. Other fund categories, money market funds, fixed income funds, REITs, infrastructure funds, and dollar-denominated funds mostly returned between 9% and 18%. 

These funds played their role, but they were geared more toward income and capital preservation than aggressive growth.

Another critical takeaway is that performance varied sharply within each category. Some fund managers significantly outperformed peers through superior stock selection, disciplined strategy, and effective risk management. 

This reinforces an important point: returns matter, but consistency, liquidity, fund size, and the manager’s experience are just as important when choosing where to invest in 2026.

So, which mutual fund categories and which managers stand out going forward?

Equity-Based Mutual Funds: The Growth Engine for 2026

Equity-based mutual funds enter 2026 as the strongest-performing category, with average returns above 50% in 2025. For investors seeking inflation-beating growth, they remain the most compelling option.

These funds invest primarily in listed equities, offering exposure to a diversified basket of companies across sectors. Instead of betting on a handful of stocks, investors benefit from professional management and reduced stock-specific risk. 

While equity funds can be volatile, history shows they offer the highest long-term return potential.

Why equity funds still make sense in 2026

• The market enters 2026 with strong momentum following a historic rally in 2025.
  
• Several sectors, particularly banking, still trade at attractive valuations despite recent gains.
  
• Dividend-paying stocks continue to offer compelling yields that compete with fixed income.
  
• Active fund managers can rotate between sectors as leadership shifts, capturing new opportunities.
  

Top equity fund picks for 2026

• Stanbic IBTC Nigerian Equity Fund: Delivered roughly 62% in 2025. Its strength lies in size, diversification, and disciplined portfolio construction.
  
• Zrosk Magna Equity Fund: Returned about 64%, driven by high-conviction stock selection and active sector rotation.
  
• Guaranty Trust Equity Income Fund: Stood out with an exceptional return of around 80%, combining capital appreciation with consistent dividend income.
  

For growth-focused investors, these funds provide a solid foundation heading into 2026.

Balanced Mutual Funds: Growth with Stability

Balanced mutual funds appeal to investors who want exposure to equities but with lower volatility. By combining stocks and fixed-income instruments, these funds aim to deliver steady growth while cushioning market swings.

In 2025, balanced funds returned an average of about 31%, supported by a combined net asset value exceeding ₦80 billion. 

While they did not match pure equity funds, they offered a smoother ride, an attractive feature after a strong market rally.

Why balanced funds make sense in 2026

• They help smooth volatility following the sharp equity gains of 2025.
  
• As inflation and the Monetary Policy Rate are expected to trend lower, balanced funds can tilt toward equities without abandoning income stability.
  
• They reduce timing risk, as professional managers actively adjust asset allocation based on market conditions.
  
• Investors gain diversification without needing to rebalance portfolios themselves.
  

Top balanced fund picks for 2026

• Zenith Balanced Strategy Fund: Delivered about 55% in 2025, standing out for strong equity positioning paired with disciplined risk controls.
  
• Stanbic IBTC Balanced Fund: Returned roughly 49%, benefiting from scale, diversification, and a well-structured asset mix.
  
• Alpha Morgan Balanced Fund: Posted around 42%, driven by flexible asset allocation and quick response to changing market conditions.
  

Balanced funds are well-suited for investors who want growth but prefer less volatility than pure equity exposure.

Money Market Mutual Funds: Safety, Liquidity, and Income

Money market funds remain the largest and most stable segment of Nigeria’s mutual fund industry. With a combined net asset value of over ₦4.5 trillion and average returns of about 18% as of late 2025, they play a critical role in portfolio construction.

These funds focus on short-term instruments such as treasury bills, commercial papers, and other high-quality money market securities. Investors primarily use them for capital preservation, steady income, and easy access to cash.

Why money market funds still matter in 2026

• They provide stability and liquidity in uncertain or volatile market conditions.
  
• Even with interest rates expected to ease, yields remain attractive relative to Treasury Bills and savings bonds.
  
• Exposure to high-quality commercial papers can help offset declining yields from government securities.
  
• Short maturities reduce the risk of price losses when interest rates fall.
  
• They are ideal for parking funds while waiting for new investment opportunities.
  

Top money market fund picks for 2026

• Stanbic IBTC Money Market Fund: Returned about 17% and dominates the market with a NAV of roughly ₦2.23 trillion. Its scale and liquidity make it a top choice for capital preservation.
  
• ARM Money Market Fund: Delivered around 18.1%, supported by a NAV of about ₦307 billion. It balances safety with smart yield optimization.
  
• AIICO Money Market Fund: Posted roughly 18.4%. Though smaller, it stands out for aggressive income optimization, suitable for investors comfortable with modest concentration risk.
  

Investors should always review each fund’s factsheet and strategy to ensure alignment with their liquidity needs and risk tolerance.