Less than half equity mutual funds offer positive returns in FY26. Were they a part of your portfolio?

Less than half equity mutual funds have offered positive returns in FY26, according to an analysis by ETMutualFunds. In other words, nearly 46% equity mutual funds have delivered positive returns. There were around 553 equity funds in the said time period, of which 253 funds offered positive returns to the investors.

A further analysis showed that, out of 553 funds, top 64 were sectoral and thematic funds and 52 being international funds.

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Nippon India Taiwan Equity Fund, an international fund, offered the highest return of 158.46% in the financial year that started on April 1, 2025 and will end on March 31, 2026 (As on March 23, 2026). DSP World Mining Overseas Equity Omni FoF delivered a return of 83.26% in FY26.

ICICI Pru Strategic Metal and Energy Equity FoF and DSP Global Clean Energy Overseas Equity Omni FoF posted a return of 69.93% and 69.53% respectively. HSBC Brazil Fund, an international fund, delivered a return of 56.23% in FY26.

Edelweiss Greater China Equity Off-shore Fund offered a return of 45.48% in FY26, followed by Mirae Asset Global X Artificial Intelligence & Technology ETF FoF which delivered a return of 44.55% in the same period.

Mirae Asset S&P 500 Top 50 ETF FoF, an international fund, posted a return of 35.82% in the financial year 26. Two global innovation based funds – DSP Global Innovation Overseas Equity Omni FoF and Kotak Global Innovation Overseas Equity Omni FOF posted a return of 28.84% and 28.83% respectively.

Why are international funds scoring big?

Shivam Pathak, CFP and Founder of Asset Elixir told ETMutualFunds that international funds’ returns in FY26 were driven by US market strength, AI-led rally in largecap tech, and rupee depreciation and investors should avoid chasing past returns and maintain a measured allocation (10–20%) for diversification, preferably through staggered investments.

Shweta Rajani, Head – Mutual Funds, Anand Rathi Wealth Limited shared with ETMutualFunds that the strong performance in international funds was mainly driven by a combination of global commodity and energy price rally, sharp rise in semiconductor and AI-related stocks, and depreciation of the Indian Rupee against the US Dollar. Additionally, recent geopolitical tensions led to higher oil prices , which enhanced the earnings of global energy and mining companies, while strong demand for chips and electronics supported Taiwan and technology-heavy markets.

“Investors should not make investment decisions in international or thematic funds solely based on recent performance.”

For investors, a balanced approach would be to keep a limited international allocation with not more than 5% of the overall portfolio and prefer diversified global funds instead of narrowly focused sector or thematic funds and an international investment should be made as an addition to the overall investment portfolio rather than being used as a short-term opportunity for returns, Shweta Rajani further said.

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Other positive performers

ICICI Pru Midcap Fund, a mid cap fund, posted a return of 12.64% in FY26. HDFC Defence Fund, the only actively managed fund based on defence sector, yielded a gain of 12.53% in the said time period.

DSP Value Fund was the last one in the list to deliver double-digit gain as the fund posted a return of 10.02% in FY26. Nippon India US Equity Opp Fund gave 9.85% return in FY26.

Two funds from Kotak Mutual Fund – Kotak Transportation & Logistics Fund and Kotak Pioneer Fund posted a return of 8.28% and 8.18% respectively. ICICI Pru PSU Equity Fund delivered a return of 5.69% in FY26.

Two funds by SBI Mutual Fund – SBI Focused Fund and SBI Banking & Financial Services Fund – yielded a gain of 5.53% and 5.38% respectively. The largest mid cap fund based on assets managed, HDFC Mid Cap Fund, delivered a return of 4.83% in FY26.

Parag Parikh Flexi Cap Fund, the largest active fund and flexi cap fund based on assets managed, delivered a return of 1.28%. Canara Rob ELSS Tax Saver was the last one to deliver positive return of around 0.01%.

Negative performers

Among the 300 fund which gave negative returns, Quant Teck Fund, a technology sector based fund, lost the most of around 28.13% in Fy26. This was followed by Samco Active Momentum Fund which delivered a negative return of 16.9% in the said time period.

HDFC Technology Fund and Tata Digital India Fund – technology sector based two funds- yielded negative return of 15.33% and 14.39% respectively. Invesco India ESG Integration Strategy Fund- was the last one to lost in double digits. The fund lost 10.21% in FY26.

Sundaram Business Cycle Fund posted a negative return of 9.61% in FY26. Quant PSU Fund lost 8.82% in the mentioned period. Two funds from Quant Mutual Fund, Quant Mid Cap Fund and Quant Business Cycle Fund – lost 8.25% and 8.22% respectively.

Bajaj Finserv Healthcare Fund and UTI Mid Cap Fund were the last ones to witness loss in double digits. These schemes lost 0.01% each in FY26.

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SIP strategy for FY27

Shweta Rajani said that for FY27 equity markets appears relatively constructive, supported by improving earnings expectations, stable macroeconomic conditions, and India’s continued growth momentum. India’s GDP growth is expected to remain in the range of 6.8% to 7%, which keeps the long-term structural growth story intact. For the coming years earnings growth is expected to improve across market segments.

She further said that for FY27, investors are suggested to consider investing in diversified equity funds such as market cap based funds largecap and flexicap categories for stability, while maintaining exposure to midcap, smallcaps and strategy based funds like value, contra and focused with market cap allocation of 55:20:25 across largecaps, midcaps and smallcaps. which can helps to manage volatility and ride across market cycles.

Pathak said that FY27 is likely to see more moderate, earnings-led returns with valuations, especially in mid and small caps, acting as a constraint. Investors should tilt towards large-cap and flexi-cap funds, maintain diversification, and avoid over-exposure to sectoral/thematic strategies.

We considered all regular and growth options. We calculated all equity mutual funds including sectoral, thematic and international funds. We calculated performance from April 1, 2025 to March 23, 2026.

Note: the above exercise is not a recommendation. The exercise was done to identify how SIP investments performed in FY26.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)

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