Financials
8 months agoMRF Publications
Title: Nearly 97% of Equity Mutual Funds Post Negative Returns in 2025: Is Your Portfolio at Risk?
Overview: A Tough Year for Equity Mutual Funds in 2025
The year 2025 has been particularly challenging for equity mutual funds, with nearly 97% of schemes delivering negative returns so far, according to recent data covering the January to April period[1]. Out of 541 equity mutual fund schemes tracked, only 18 have managed to post gains, signaling widespread underperformance across categories.
This unprecedented downturn has left investors pondering the future of their investments—especially those holding international, tech-focused, and mid to small-cap funds, which have been hit the hardest. This article breaks down the key trends, worst performers, sectoral impacts, and how investors should approach their portfolios amid this volatile environment.
Why Are Equity Mutual Funds Struggling in 2025?
Several macro and micro factors have contributed to this sharp decline in equity mutual fund returns in 2025:
Global and Domestic Economic Slowdown: A slowing GDP growth rate combined with uncertainties from US tariffs and inflationary pressures have dampened sentiment worldwide[3][5].
Foreign Investor Outflows: Intense foreign capital withdrawal from Indian equity markets amid concerns about corporate earnings growth and geopolitical uncertainties has intensified selling pressure[3][5].
Volatility in Key Sectors: Technology and international equity funds saw severe corrections, with the Nasdaq 100 and S&P 500 linked funds among the worst performers[1].
Market Correction After Strong Previous Years: Experts indicate that after spectacular returns in prior years, a market correction was inevitable and 2025 could well be a year of negative returns before recovery[5].
Worst Performing Equity Mutual Funds in 2025
Some of the most adversely affected funds include:
| Fund Name | Category | Approximate Loss (%) | |----------------------------------|------------------------|---------------------| | Nippon India Taiwan Equity Fund | International Equity | -31.52% | | Samco Flexi Cap Fund | Flexi Cap | -26.15% | | Shriram Multi Sector Rotation | Multi-Sector | -24.33% | | Invesco India Technology Fund | Technology | -24.22% | | Motilal Oswal Nasdaq 100 FOF | Thematic (Nasdaq 100) | -23.54% | | Mirae Asset NYSE FANG+ETF FoF | International/Thematic | -23.36% | | HSBC Small Cap Fund | Small Cap | -21.73% | | HSBC Midcap Fund | Mid Cap | -21.52% | | Quant Small Cap Fund | Small Cap | -14.32% | | HDFC Mid-Cap Opportunities Fund | Mid Cap | -13.21% |
These losses underscore the vulnerability of funds with high exposure to volatile segments like international equities and the tech sector[1].
Contrasting Performance: Some Bright Spots Amidst the Downturn
Despite the gloom, there are pockets of relative strength and positive performance in other segments over the fiscal year 2025:
Mid Cap and Contra Funds: These categories delivered average returns of around 9-10%, with many schemes outperforming their benchmarks. For example, Invesco India Mid Cap Fund gained around 18%, and Invesco India Contra Fund returned 13.8%[3][4].
Large & Mid Cap Funds: A majority (23 out of 31) outperformed their benchmarks with DSP Equity Opportunities Fund leading with a 15.2% return[3][4].
Some Thematic and ELSS Funds: A small number of ELSS (Equity Linked Savings Schemes) and technology funds showed modest positive returns or limited losses, reflecting selective opportunities for long-term investors[2].
What Does This Mean for Your Portfolio?
Assess Your Fund Holdings
Given the widespread negative returns, it is critical for investors to:
Review Your Portfolio: Identify if your holdings include the severely impacted funds, especially those heavily tilted towards international markets, tech, or small/mid-cap segments with elevated risks.
Understand Your Risk Appetite: Funds delivering consistent losses may not align with your risk tolerance or timelines; consider reallocating to funds with more stable returns or better fundamentals.
Invest with a Long-Term Perspective
Market volatility and fund underperformance over short periods are not necessarily indicative of future performance. Experts recommend:
Avoid making knee-jerk redemption decisions based solely on recent poor returns[4].
Align fund choices with your financial goals, risk profile, and investment horizon.
Consider diversification across sectors and categories to mitigate risks.
Strategic Mutual Fund Investment Tips for 2025 and Beyond
Focus on Quality Large and Mid Cap Funds: These funds have shown relative resilience, often outperforming benchmarks even amidst volatility.
Diversify International Exposure: Rather than over-concentrating in a single geography or theme, a balanced international allocation can reduce risk.
Consider Contra and Value Funds: These categories offered positive returns in FY25 and may be suitable for conservative investors.
Explore ELSS for Tax Savings and Long-Term Growth: Despite volatility, ELSS schemes like SBI ELSS Tax Saver and Mirae Asset ELSS were less impacted and offer tax benefits.
Monitor Economic and Market Indicators Closely: Interest rate decisions, inflation trends, and geopolitical developments like trade policies critically affect market performance.
Experts Weigh In
Sandeep Bagla, CEO of Trust Mutual Fund, expects 2025 to be challenging but encourages investors to stay invested, especially in sectors like private banks with strong fundamentals[5]. He emphasizes the importance of patience, as markets tend to recover once economic and earnings cycles improve.
Conclusion: Is Your Portfolio Prepared for the Current Market Reality?
The sobering reality that 97% of equity mutual funds are posting negative returns in 2025 should prompt investors to take a closer look at their fund portfolios and make informed decisions based on risk appetite, diversification, and long-term goals.
While some categories and funds remain vulnerable, others offer opportunities for growth and stability. Understanding these nuances, avoiding panic selling, and staying invested with a strategic approach will be key to navigating the turbulent equity mutual fund landscape in 2025.
Keywords to Note
- Equity mutual funds 2025 performance
- Negative returns mutual funds
- Best mutual funds to invest 2025
- Mid cap mutual fund returns 2025
- Flexi cap fund performance
- International equity mutual funds loss
- ELSS mutual funds tax saver 2025
- Mutual fund portfolio review 2025
- Market volatility mutual funds
- SIP investment strategy 2025
By carefully auditing your portfolio and adopting a prudent investment strategy, you can better weather the current equity market storm and position yourself for future gains. Are any of these underperforming funds part of your portfolio? Now is the time to review and strategize.
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