2025 Turns Dull For Mutual Fund Investors: 70% Equity Funds Deliver Under 5% Returns

As we approach the end of the year, 2025 does not seem to be a great year for mutual fund investors. Most equity mutual funds disappointed with gloomy returns in the last year. Out of 259 equity funds, 177 schemes delivered five per cent or lower returns. Even worse, out of these 177 funds, 49 turned negative, according to data from Value Research.

For this study, we have considered only actively managed equity funds, including large-cap funds, mid-cap funds, small-cap funds, large & mid-cap funds, flexi-cap funds, tax-saving or equity-linked savings schemes (ELSS), and value-oriented funds.

Now, before we dig deeper into the numbers, as an investor, you must understand that one year is too short a time period to read an equity mutual fund. Equity funds can turn highly volatile in a short time period. You must consider investing in equity funds only if you have at least seven years in hand. So, don’t invest based on just one study. This is purely meant for educational purposes only.

Small Cap Funds Worst Hit!

Small-cap funds have taken the worst hit in the last one-year period ending November 09, 2025. 19 out of 29 small-cap funds delivered negative returns. The three funds hit the hardest include names like Tata Small Cap Fund (-11.07 per cent), LIC MF Small Cap Fund (-8.39 per cent), and HSBC Small Cap Fund (-8.06 per cent).

These 19 funds manage massive assets worth Rs 2.57 lakh crore.

The benchmark index, the BSE Small Cap 250 index, is down by three per cent in the same time period. Whereas, the category's 1-year returns on average stood at negative 1.82 per cent.

Nippon India Small Cap Fund, the largest small-cap fund delivered -4.75 per cent returns in the same time period. It manages over Rs 66,000 crore worth of assets.

One-year returns in the small-cap funds space ranged between 9.69 per cent and -11.07 per cent.

Flexi Cap Funds felt the pain too!

12 out of 77 funds in the flexi cap category of mutual funds turned negative in the last year. The 12 ill-performers hold assets worth Rs 26,478 crore. The worst performer was a small-sized fund, Samco Flexi Cap Fund (-16.39 per cent), followed by Motilal Oswal Focused Fund (-6.43 per cent).

The largest fund in the category, Parag Parikh Flexi Cap Fund, which is also the largest actively managed equity fund in the country, holding gigantic assets to the tune of Rs 1.25 lakh crore, delivered 7.68 per cent returns in the period under consideration.

Average category returns stood at 3.24 per cent, underperforming the diversified BSE 500 Index, which grew by 4.06 per cent. The BSE 500 index represents the largest 500 companies of the country.

Other Equity Fund Categories Unimpressive

Four out of 29 mid-cap funds delivered negative returns in the last 1 year. The names include Quant Mid Cap Fund, Motilal Oswal Midcap Fund, SBI Midcap Fund, and JM Midcap Fund.

These four funds hold assets worth a whopping Rs 70,266 crore.

The category's 1-year returns on average stood at four per cent. Invesco India Mid Cap Fund stood out with 13.72 per cent returns in the same time period, the only fund with double-digit returns in the category.

Next in line were White Oak Capital Mid Cap Fund, a comparatively young fund that was launched in 2022, and Mirae Asset Midcap Fund, which manages Rs 17,194 crore worth of investors' money.

HDFC Mid Cap Fund, the largest fund in the mid-cap category, grew by 7.38 per cent.

And the benchmark index, Nifty 150 index, delivered 6.6 per cent returns.

Coming to the relatively less volatile category of equity funds, the large-cap funds are. They, on average, delivered 4.9 per cent returns. The returns ranged between 12.36 per cent and 0.4 per cent, with the worst returns being delivered by the Quant Large Cap Fund.

The largest large-cap fund with assets worth Rs 76,000 crore, ICICI Pru Large Cap Fund, gave 7.15 per cent returns during the last year.

Two out of 31 large & mid-cap funds delivered negative returns in the last year- Quant Large & Mid Cap Fund (-3.86 per cent) and Tata Large  & Mid Cap Fund (-0.70 per cent).

The category delivered meagre average returns of 4.93 per cent in the last year.

The category topper in terms of one-year returns was the Invesco India Large & Mid Cap fund with returns worth 12.09 per cent. The fund holds assets worth Rs 9,049 crore. The largest fund in the category, Mirae Asset Large & Midcap Fund, gave 6.47 per cent returns in the same time period.