Introduction to Equity Mutual Funds in FY25

The financial year 2025 has marked a significant milestone for equity mutual funds, with a notable number of funds delivering impressive returns. Initially reported as 58, the actual figure has grown to 121 equity mutual funds providing double-digit returns to their investors. This surge in performance underscores the resilience of the equity market and highlights opportunities for investors seeking growth in their portfolios.

Top Performing Funds in FY25

The top performers in the equity mutual fund space have been standout funds focused on specific sectors or indices:

• Mirae Asset Hang Seng TECH ETF FoF, Mirae Asset NYSE FANG+ ETF FoF, and Mirae Asset S&P 500 Top 50 ETF FoF have led the pack with remarkable returns of 88.82%, 37.16%, and 31.75%, respectively. These funds, which focus on technology and U.S. equities, have capitalized on global trends in these sectors.

• HDFC Pharma and Healthcare Fund and WOC Pharma and Healthcare Fund have also performed strongly, delivering returns of 27.65% and 26.95%, respectively. These healthcare-focused funds have benefited from the consistent demand in the pharmaceutical sector.

• SBI Healthcare Opportunities Fund posted a return of around 18.81%, while ICICI Pru Pharma Healthcare & Diagnostics (P.H.D) Fund and Axis Greater China Equity FoF delivered 18.78% and 18.25%, respectively. These funds have demonstrated the potential for growth in both domestic and international healthcare and technology sectors.

Trends in Mid-Cap and Small-Cap Funds

Beyond the top performers, mid-cap and small-cap funds have also shown promising results:

• Motilal Oswal Midcap Fund offered a return of around 15.79%, closely followed by Motilal Oswal Small Cap Fund with a 15.70% return. These funds reflect the growth potential in the mid-cap and small-cap segments of the market.

• Bandhan Small Cap Fund delivered a return of around 15.39%, indicating that small-cap investments can yield substantial gains when managed effectively.

Technology and Sector-Specific Funds

Technology and sector-specific funds have been notable performers:

• HDFC Technology Fund achieved a return of around 14.10%, while HDFC Defence Fund closely followed with a 14.09% return. These returns highlight the growth opportunities in technology and defense sectors.

• SBI Technology Opportunities Fund delivered a return of about 12.47%, further emphasizing the potential in technology-focused investments.

Strategies for Investors

Given the varied performance across different funds, investors should adopt effective strategies to maximize returns:

• Diversification: Spread investments across multiple sectors and asset classes to mitigate risks and capitalize on diverse growth opportunities.

• Long-Term Perspective: Focus on long-term growth rather than short-term fluctuations, as market performance can be volatile.

• Regular Portfolio Review: Periodically assess your portfolio to ensure alignment with your investment objectives and risk tolerance.

Challenges in the Market

Despite the positive trend, some equity mutual funds have faced challenges:

• Double-Digit Losses: Around 20 equity mutual funds have encountered double-digit losses, with funds like Quant Infrastructure Fund and Motilal Oswal Focused Fund experiencing significant declines. Such losses underscore the importance of diversification and risk management.

Global Trends and Comparison

Globally, mutual funds have shown varied performance:

• In the U.S., large-cap stocks and technology sectors have driven market gains. Funds like Vanguard U.S. Eq Idx £ Acc have performed well, reflecting the strength of the U.S. market.

• In the UK, popular funds such as L&G Global Technology Index and Vanguard LifeStrategy 80% Equity have been favored by investors, highlighting the appeal of technology and diversified equity portfolios.

Conclusion

The performance of equity mutual funds in FY25 offers insights for both seasoned and new investors. With significant returns from top funds and sectors, it's crucial for investors to stay informed, diversify portfolios, and maintain a long-term investment outlook. As the market continues to evolve, understanding these trends and adapting strategies will be key to achieving investment goals.