Small cap funds led the equity segment over 5-year and 10-year horizons, with a 5-year average return of 27.59%, while large cap funds recorded a 1-year average loss of around 4.92%.
The report highlighted that the negative 1-year returns for equity funds reflect short-term market fluctuations and global uncertainties, but long-term trends remain favourable. Increasing participation from retail investors and broader market growth have contributed to sustained performance in small and mid-cap categories.
In the debt fund segment, credit risk funds generated the highest average returns across 6-month, 1-year, 3-year, and 5-year periods, posting a 6-month annualised return of 10.02%.
Low duration funds recorded the highest 1-month return at 18.57%, while Gilt Funds with 10-year constant duration posted a 10-year average return of 7.76%. All debt fund categories delivered positive returns across 1-year, 3-year, 5-year, and 10-year periods, reflecting stability in interest rate conditions and supportive fiscal measures.
ICRA Analytics noted that mutual fund investors can benefit from disciplined, long-term investing, as equity funds capture market growth while debt funds provide stable returns. The report also indicates that fund performance trends vary by category and investment horizon, emphasising the importance of matching investor goals with fund selection.