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    Home»Mutual Funds»AUM giants lose to smaller equity funds: The surprising gap in 1-year returns investors need to know about
    Mutual Funds

    AUM giants lose to smaller equity funds: The surprising gap in 1-year returns investors need to know about

    September 6, 2026


    If you are choosing an equity mutual fund mainly because it has a large AUM (assets under management), you may be relying on the wrong indicator. AUM represents the market value of the assets managed by a mutual fund scheme.

    It tells investors how large a fund is, but a bigger AUM does not automatically mean better returns. So, let’s look at the one-year numbers of equity funds.

    India’s biggest equity funds by AUM: How did they perform?

    Equity Funds AUM ( ₹ crore) 1-year return
    Parag Parikh Flexi Cap Fund 1,48,429 -2.11%
    HDFC Flexi Cap Fund 1,10,736 4.23%
    HDFC Mid Cap Fund 1,05,143 10.69%
    ICICI Prudential Large Cap Fund 80,960 -1.44%
    Nippon India Small Cap Fund 78,957 11.71%

    *Source: Value Research, Direct Plans, Return as on 4 Sep 2026, AUM as on 31 July 2026, Excluding sectoral/ thematic funds

    Also Read | Already invested in flexi-cap? Avoid these 3 categories when adding more funds

    The contrast becomes clear when you look at the numbers. Parag Parikh Flexi Cap, the largest fund in the list with an AUM of nearly ₹1.5 lakh crore, delivered a negative 2.11% return over the last 1 year.

    ICICI Prudential Large Cap Fund also slipped 1.44% during the same period.

    In contrast, Nippon India Small Cap, which ranks fifth among the top five funds by AUM, delivered the highest return in this group at 11.71%.

    The comparison highlights an important point for investors. A fund size may indicate its popularity, but it does not necessarily translate into better returns.

    Which equity funds lead in the 1-year returns?

    Equity Funds AUM ( ₹ crore) 1-year return
    Trust MF Small Cap Fund 2,860 33.87%
    Bank of India Small Cap Fund 2,819 28.83%
    Motilal Oswal Focused Fund 1,693 28.09%
    Motilal Oswal Small Cap Fund 7,605 25.65%
    Union Small Cap Fund 2,402 24.95%

    *Source: Value Research, Direct Plans, Return as on 4 Sep 2026, AUM as on 31 July 2026, Excluding sectoral/ thematic funds

    The contrast is striking. Trust MF Small Cap, with an AUM of just ₹2,860 crore, topped the diversified equity fund category in the list with a 33.87% one-year return.

    Its AUM is just a fraction of Parag Parikh Flexi Cap’s ₹1.48 lakh crore corpus, which is roughly 1/52nd the size of the country’s largest fund in this comparison. Yet, its one-year return was significantly higher.

    However, it is important to note that the two funds belong to different categories and follow different portfolio allocation rules.

    The pattern is visible across the top five performers. Four of the five funds had an AUM of less than ₹3,000 crore, while Motilal Oswal Small Cap, with an AUM of ₹7,605 crore, was the only fund above that mark. Even its corpus remains far smaller than that of the largest equity funds in the first table.

    Also Read | India’s ₹100 savings puzzle: ₹33 goes to banks, ₹39 to pension funds and markets

    AUM can tell you how big a fund is. It cannot tell you where it will rank in returns. In fact, a look at the one-year performance of some of the largest equity funds versus smaller funds throws up a surprising picture. Some funds with a fraction of the AUM of the industry’s biggest schemes have delivered significantly higher returns.

    Before investing, investors should look at the equity fund’s long-term performance, consistency across market cycles, risk, portfolio composition, expense ratio, category, and investment strategy.

    Disclaimer: This is purely for educational/informational purposes and should not be taken as any sort of investment advice. Always consult a SEBI-registered advisor before making any investment decisions.



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