Equity mutual funds have turned in a mixed performance so far in 2025, with returns swinging widely between losses of 15% and gains of 13%. Despite global turbulence stemming from tariff tensions and geopolitical uncertainty, Indian investors have remained steadfast, continuing to allocate capital to mutual funds in record volumes.
According to data from the Association of Mutual Funds in India (AMFI), the industry’s total assets under management (AUM) grew by over Rs 7 lakh crore between January and June 2025, touching a record Rs 74.41 lakh crore — an 11% rise in six months. Net inflows surged to Rs 4.18 lakh crore, already surpassing most full-year inflows since 2000. Analysts say the continued rise in SIPs, strong domestic liquidity, and improving investor awareness have kept fund flows steady despite volatile markets.
Large caps lead, flexi caps shine
Commenting on fund performance, Feroze Azeez, Joint CEO at Anand Rathi Wealth, said a handful of equity funds have stood out this year for consistent execution and contrarian positioning. “If you look at this financial year starting April 1, Quant Large Cap has been among the best performers. HDFC Flexi Cap, which is part of my model portfolio, has also done exceptionally well. Another standout is the Nippon Large Cap Fund, which delivered a star performance,” Azeez noted.
His own internal rate of return (IRR) for the period was above 40%, reflecting selective positioning in a few outperforming funds while exiting others showing governance or redemption risk. “We exited Axis Bluechip Fund and SBI Smallcap Fund earlier this year. Even if a fund manager is good, you don’t want to be caught in a redemption exodus — that’s like a run on the fund,” Azeez explained.
Investor behaviour
Azeez cautioned retail investors against chasing themes and new fund offers (NFOs) without track records. “Sector funds and NFOs are emotionally hazardous — investors buy at highs and sell at lows,” he said. His fund selection framework filters schemes using multiple quantitative parameters, including a minimum three-year track record, Rs 3,000 crore AMC AUM, and Rs 1,000 crore scheme size, combined with statistical models and risk scoring.
“The courage of a fund manager — not being afraid to hold 17–18 focused stocks when others hug the index — can create alpha. That’s what we saw with Quant and Motilal Oswal after their strategic shifts,” he added.
Tracking every rupee
Beyond fund selection, Azeez stressed the importance of financial discipline and technology in wealth management. “We built tech to find ‘lost money’ — untracked mutual fund units or forgotten investments — and recovered over Rs 120 crore across 500 families,” he said.
He advocates maintaining a weekly net worth tracker, listing even small hand loans or idle assets. “Respect for money starts with tracking it. You’ll be surprised how much is lost to neglect,” Azeez added.
Risk, returns, and realism
For 2025, Azeez expects long-term SIPs to remain the backbone of household investing, with lump-sum entries reserved for market dips. His personal allocation is 65% equity mutual funds and 35% structured products, while treating real estate as consumption, not investment.
On sectoral preferences, he remains neutral on gold and silver, preferring data-backed diversification and risk-calibrated returns. “The aim is not to chase the highest returns, but to achieve risk-adjusted performance with transparency and discipline,” he concluded.
Disclaimer: Business Today provides market and personal news for informational purposes only and should not be construed as investment advice. All mutual fund investments are subject to market risks. Readers are encouraged to consult with a qualified financial advisor before making any investment decisions.