The excitement in the equity market seen over the last few years has turned into sombreness in the last one year.
During this period, returns on the benchmark indices such as Nifty 50 and Sensex were largely flat, while the lower marketcap stocks underperformed.
The Nifty Midcap 150 index declined 1.9% while the Nifty Smallcap 250 index fell 7.5%.
Here are the factors capping growth in the market:
- Muted corporate earnings growth
- Slowdown in consumption growth
- Uncertainty related to US tariffs and potential trade wars
- SEBI’s crackdown on derivatives trading
- Geopolitical tensions
These factors resulted in foreign capital outflows, resulting in corrections, even as domestic buyers cushioned the fall to an extent.
Investors in equity mutual funds too felt the pinch with several schemes generating subdued growth. The impact was more pronounced in certain schemes compared to others.
In this editorial, we will be looking at the 3 worst performing mutual funds based on 1-year rolling returns. We have avoided schemes with track record of less than 3 years.
It is worth noting that all these schemes follow multi-cap strategy, investing a substantial portion across market caps. Further, all three schemes follow a high portfolio churn strategy, holding most of their stocks with a short-term view.
Performance Snapshot – Worst Performing Mutual Funds
| Scheme Name | Returns | Risk Ratios | ||
| 1 Yr (%) | Std Dev | Sharpe | Sortino | |
| Samco Flexi Cap Fund | -5.26 | 17.65 | 0.00 | 0.00 |
| Quant Multi Cap Fund | 4.93 | 15.89 | 0.17 | 0.31 |
| Shriram Flexi Cap Fund | 6.28 | 14.61 | 0.14 | 0.24 |
| NIFTY 500 – TRI | 13.47 | 12.81 | 0.23 | 0.46 |
| Nifty500 Multicap 50:25:25 – TRI | 14.35 | 13.88 | 0.26 | 0.53 |
Source: ACE MF
#1 Samco Flexi Cap Fund
Launched in February 2022, Samco Flexi Cap Fund invests in a compact portfolio of around 25 stocks.
The fund has the flexibility to invest across market caps without any limits.
It aims to select companies that score high on parameters such as competitive strength, sound balance sheet, growth potential, corporate governance, cash flow, and regulatory environment.
On a 1-year rolling return basis, Samco Flexi Cap Fund was the only scheme with negative growth, having generated returns of -5.3%. In comparison, the benchmark Nifty 500 – TRI index delivered returns of 13.5% during this period.
As of 31 July 2025, the fund held its top exposure in Bharat Electronics (8.1%), Solar Industries India (6.2%), and AstraZeneca Pharma India (5.8%).
In terms of sectors, the fund’s portfolio is dominated by the top 6 sectors that form 80% of its assets. Its top sectors are finance (14.9%), consumption (14.2%), and chemicals (13.8%).
In the last one year, the fund’s portfolio turnover ratio was in the range of 150-200%.
It allocated 21.6% of its assets in large caps, 43.9% in midcaps, and 33.5% in smallcaps.
#2 Quant Multi Cap Fund
Launched in March 2001, Quant Multi Cap Fund (earlier Quant Active Fund) focuses on following a quant-based approach to identify attractive opportunities across market caps and sectors.
It has the mandate to invest at least 75% of its assets in equity and equity-related instruments investing a minimum of 25% each in large-caps, mid-caps, and small-caps.
The fund follows a momentum-based strategy to identify attractive-looking opportunities having high alpha potential.
On a 1-year rolling return basis, Quant Multi Cap Fund registered growth of 4.9% compared to a growth 14.4% in Nifty500 Multicap 50:25:25 – TRI index.
As of 31 July 2025, the fund held 54 stocks in its portfolio with higher exposure in Aurobindo Pharma (4.8%), Reliance Industries (4.8%), and JIO Financial Services (4%).
In terms of sectors, the fund is bullish on FMCG (11.1%), healthcare (8.6%), and infrastructure (6.4%).
In the last one year, the fund’s portfolio turnover ratio was in the range of 150-250%.
It allocated 33.7% of its assets in large caps, 25.8% in midcaps, and 27.4% in smallcaps.
#3 Shriram Flexi Cap Fund
Launched in September 2018, Shriram Flexi Cap Fund invest dynamically large cap, mid cap, and small cap segments.
It aims to adopt a blend of growth and value style of investing and follows a bottom-up approach to pick stocks.
On a 1-year rolling return basis, Shriram Flexi Cap Fund registered growth of 6.3% compared to a growth 13.5% in Nifty 500 – TRI index.
As of 31 July 2025, the fund held 69 stocks in its portfolio with top allocation in HDFC Bank (8.1%), ICICI Bank (5.6%), and Bharti Airtel (4.2%).
In terms of sectors, the fund’s portfolio is skewed towards banking (19.6%), finance (10.9%), and auto & auto ancillaries (10.3%).
In the last one year, the fund’s portfolio turnover ratio was significantly high at around 500-800%.
It allocated 60.3% of its assets in large caps, 20.3% in midcaps, and 15.3% in smallcaps.
Conclusion
While the returns on equity mutual funds in the past 1 year have been subpar, the returns may improve as the equity market recovers.
It is important to remember that markets are cyclical in nature – bearish phases are followed by bullish phases, and vice versa.
Factors such as GST reforms, upcoming festive season, and lower inflation can help revive growth in the market.
Thus, as an investor, you may ignore short-term underperformance of a mutual fund due to market fluctuations.
However, if a fund consistently underperforms the benchmark and its peers based on both quantitative and qualitative parameters, then you certainly need to track it closely.
Conducting a periodic review of your mutual fund portfolio will help you analyse how each of the scheme is performing, and whether there is a need to rebalance the portfolio or replace a scheme with a better alternative.
#Table Note: Data as of September 08, 2025
The securities quoted are for illustration only and are not recommendatory
Past performance is not an indicator for future returns.
Returns are on a rolling basis and in %. Direct Plan-Growth option.
Risk ratios are calculated over a 3-year period assuming a risk-free rate of 6% p.a.
Happy investing.
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