In 2025, Indian mutual funds have faced a rocky year, with most categories underperforming. Despite this, about 70% of mutual fund schemes have still managed to deliver positive year-to-date (YTD) returns.
The broader stock market has been relatively flat — the Nifty 50 has gained just 4.68% by May 28, 2025. Meanwhile, mid- and small-cap indices have struggled: the Nifty Midcap 150 is slightly down by 0.46%, and the Nifty Smallcap 250 has dropped 5.89%.
Earlier in the year, the situation was worse. The Nifty 50 had seen a decline of up to 9%, while mid- and small-cap indices had fallen as much as 26%.
Factors like the India-Pakistan war, weak domestic earnings, and ongoing US-China trade tensions have led to high volatility in Indian markets. Even before these events, the market was already correcting after a strong rally, which made stock valuations more reasonable. This created opportunities in specific areas.
Many mutual fund managers, especially those handling thematic funds, seized these opportunities and invested with confidence. As the market began recovering, broader equity segments bounced back, though some mutual funds outperformed the rest.
According to data from ACE MF, which tracks mutual funds, there are nearly 1,800 schemes across equity, debt, and hybrid categories, with around 1,650 having at least five months of performance history. Out of these, 1,162 schemes have posted positive returns this year as of May 28.
