Social ,24 Apr 2025

Nearly 97% of Equity Mutual Funds in India Deliver Negative Returns in 2025

The Indian equity mutual fund landscape is off to a shaky start in 2025. According to the latest data, nearly 97% of equity mutual fund schemes have posted negative returns as of April 2025, sending a wave of concern across the investor community. With only 18 out of 541 equity schemes delivering positive performance, retail investors are being reminded of the inherent volatility of capital markets.

This downturn has been broad-based, impacting almost every category—from large-cap and mid-cap to small-cap and sectoral/thematic funds. For many investors, especially those relying on systematic investment plans (SIPs), this has been one of the most challenging quarters in recent years.

 

What the Numbers Say

As per recent mutual fund analytics and performance data:

1. Total number of active equity mutual fund schemes: 541
2. Schemes with negative returns (YTD 2025): 523
3. Schemes with positive returns: Only 18
4. Worst affected funds include:
   1. Nippon India Taiwan Equity Fund: -31.5%
   2. Samco Flexi Cap Fund: -26.1%
   3. Shriram Multi Sector Rotation Fund: -24.3%
   4. Invesco India Technology Fund: -24.2%
   5. Motilal Oswal Nasdaq 100 FOF: -23.5%

This widespread underperformance reflects a mix of global headwinds, sector-specific corrections, and overall cautious sentiment in the Indian markets.

 

What’s Triggering the Decline?

1. Global Volatility and Recession Fears

High inflation, slowing global growth, geopolitical tensions, and concerns over interest rates have cast a shadow over emerging markets like India. These factors have led to capital outflows and dented investor confidence.

2. Technology and Global Funds Dragging Returns

Funds investing in international equities, especially tech-heavy indices like Nasdaq, have been among the worst performers due to a global tech selloff and valuation corrections.

3. Mid & Small-Cap Correction

After two years of strong rallies, many mid and small-cap stocks have entered correction territory. Valuations had soared well above historical averages, and recent profit-booking has brought down returns sharply.

4. Weak Corporate Earnings and Macro Sentiment

Muted earnings in Q4FY25 and rising concerns over consumption slowdown have impacted market sentiment further.

5. SIP Flow Dip Reflects Investor Anxiety

Despite increasing financial literacy, the number of SIP suspensions rose in March 2025, indicating growing caution among retail investors.

 

Impact on Retail Investors

For retail investors who had been bullish on equities, this is a sobering reminder of the importance of portfolio diversification and goal-based planning. SIP investors may feel the pinch, but experts advise against panic exits, emphasizing that volatility is part and parcel of market investing.

 

What Should Investors Do Now?

1. Stay the Course: Long-term investors should not get discouraged by short-term dips.
2. Review and Rebalance: It's a good time to evaluate your asset allocation.
3. Diversify: A mix of debt, gold, and equity may reduce portfolio risk.
4. Focus on Quality Funds: Look for funds with consistent long-term track records.
5. Consult Advisors: Get professional guidance before making reactive decisions.

 

Outlook for the Rest of 2025

While the first quarter has been tough, many analysts remain cautiously optimistic. Stabilization in global markets, clarity on interest rate directions, and improved domestic earnings in the next quarters could provide a turnaround for equity markets in H2 2025.

 

Conclusion

The dismal performance of equity mutual funds so far in 2025 underscores a fundamental principle of investing: market cycles are inevitable. For investors, this period of underperformance is a reminder to focus on long-term objectives, disciplined investing, and portfolio resilience.

While short-term turbulence may be unsettling, staying invested with a clear financial goal can help ride out these rough patches and emerge stronger.