Most of the equity MF schemes have delivered negative returns in the last six month given the recent market mayhem amid foreign investors exit from India.

Returns from small and mid-cap funds have plunged 22 per cent and 19 per cent while that of value funds were down 17 per cent in last six months ended February.

Sectoral and flexi-cap funds were down 19 per cent and 16 per cent in the same period.

Over the one-year period, actively managed equity mutual funds returns were hanging precariously with value funds delivering just 0.34 per cent returns while that of ELSS was 0.70 per cent. Mid-cap and focused funds gave a return of 3 per cent and 2 per cent in last one year.

Despite small cap indices falling sharply, small cap funds have managed to deliver 21 per cent and 25 per cent over 3-year and 5-year period. Mid-cap and value funds have delivered 23 per cent 21 per cent in three years while in 5-year they have returned 21 per cent and 20 per cent.

The benchmark Nifty has fallen nearly 16 per cent from its peak, primarily due to high valuations leading to strong FII outflows of ₹1.12 lakh crore in just two months of this year. However, strong inflows through mutual funds have consistently provided support and stabilised market sentiments.

Tanmay Shah, Managing Director of stock broking firm SIHL said despite market volatility, equity MF inflows have remained resilient with SIP contributions exceeding ₹26,000 crore in the past two months.

In January, he said MFs recorded a net inflow of nearly ₹40,000 crore out of total domestic institutional flows of ₹86,000 crore, counterbalancing FIIs’ outflow of nearly ₹87,000 crore.

‘equity inflows stable’

“Historical trends suggest that equity inflows remain unaffected even after a 17-18 per cent fall in market. However, a steep drop from here may tend to trigger investor hesitancy in pumping more money into MFs though the long-term outlook remains positive,” he added.

Over the years, equity AUM has grown ten times from ₹3 lakh crore to ₹29 lakh crore in last 10 year.

Kavitha Narayan, Vice President and Head Research and New Initiatives, Capricorne Mindframe, said, trying to time the markets by exiting or entering a strategy at the wrong time could impact an investors’ portfolio significantly.

However, she said it is important to revisit the portfolio at regular intervals of about six months and make changes based on forward-looking views of the markets.

Investors should be conscious and aware of market cyclicality and rebalance portfolios with a view to maximise returns, rather than exit funds based on short term underperformance, said Narayan.

Published on March 3, 2025