“Mutual Funds Sahi Hai.” However, for mutual fund investors, the decision to choose the right funds has never been more challenging. Over the past year, the divergence in returns has been so extreme that being invested in the right categories meant the difference between a 75% return and barely beating inflation.
The star performers were commodity-linked funds. With surging gold and silver prices, funds targeting commodities directly or investing in mining firms performed the best. Equities also delivered healthy returns, posting a ~15% YoY gain. However, 2026 has been off to a weak start, with equity funds emerging as the worst-performing category and down ~3.34% YTD. Debt funds had lacklustre returns as the rising interest rate regime impacted performance. Long-duration funds performed especially poorly. Hybrid strategies continued to provide intermediate returns, reflecting balanced exposure between equity participation and income stability.
Following is a snapshot of the returns across key categories. Commodity-linked funds are included under the Other category.
Table: Mutual Fund Performance By Major Category
|
Category |
Category Return – YoY |
Category Return – YTD |
|
Other |
21.49 |
1.49 |
|
Equity |
14.84 |
-3.34 |
|
Hybrid |
11.48 |
-0.40 |
|
Solution Oriented |
11.37 |
-2.18 |
|
Debt |
6.33 |
0.16 |
Source: AMFI
In Part 1 of what worked in Mutual Funds over the past year, we analyse the two most popular categories – Equities and Debt funds.
Equity Funds – Mid Caps Performed The Best. Small Caps Fared The Worst
Within equities, Mid Cap strategies led on YoY Category Return, while Small Cap strategies were the worst performers. The return differential between these categories was substantial at ~5%. However, what is more important is being invested in the right funds within these categories.
Dispersion (the difference between the returns of top-performing and bottom-performing funds) was extremely high. In mid-caps, for instance, the top-performing fund delivered a 28% return while the bottom-performing fund lost money. Even in other categories, the dispersion has been 15-20% on a YoY basis.
Table: YoY Equity Mutual Fund Performance By Category
|
Sub-Category |
Category Return – YoY |
Top Performer |
Bottom Performer |
|
Mid Cap |
18.66 |
ICICI Prudential MidCap Fund – 28.83% |
Quant Mid Cap Fund – 1.06% |
|
Large & Mid Cap |
16.59 |
Helios Large And Mid Cap Fund – 24.94% |
Quant Large And Mid Cap Fund – 2.85% |
|
Multi Cap |
15.07 |
Groww Multicap Fund – 22.39% |
Samco Multi Cap Fund – (-2.13%) |
|
Sectoral & Thematic |
15.04 |
Nippon India Taiwan Equity Fund – 79.60% |
Quant Teck Fund – (-16.91%) |
|
Contra |
15.01 |
Kotak Contra Fund – 19.94% |
SBI Contra Fund – 12.19% |
|
Dividend Yield |
14.75 |
Tata Dividend Yield Fund – 23.30% |
Franklin India Dividend Yield Fund – 10.25% |
|
Value |
14.72 |
HSBC Value Fund – 20.25% |
JM Value Fund – 6.62% |
|
Focused |
14.49 |
Kotak Focused Fund – 24.70% |
Invesco India Focused Fund – 5.94% |
|
Large Cap |
13.94 |
Bank Of India Large Cap Fund – 21.91% |
PGIM India Large Cap Fund – 3.37% |
|
Flexi Cap |
13.81 |
Kotak Flexicap Fund – 20.75% |
JM Flexicap Fund – 4.70% |
|
ELSS |
13.03 |
Mirae Asset ELSS Tax Saver Fund – 18.96% |
Taurus ELSS Tax Saver Fund – 3.77% |
|
Small Cap |
13.01 |
Union Small Cap Fund – 20.51% |
Tata Small Cap Fund – 1.64% |
Source: AMFI
Table: YTD Equity Mutual Fund Performance By Category
|
Sub-Category |
Category Return – YTD |
Top Performer |
Bottom Performer |
|
Dividend Yield |
-1.47 |
Aditya Birla Sun Life Dividend Yield Fund – 1.24% |
LIC MF Dividend Yield Fund – (-3.54%) |
|
Value |
-2.62 |
DSP Value Fund – 0.85% |
Quant Value Fund – (-5.89%) |
|
Large Cap |
-3.01 |
Bank Of India Large Cap Fund – (-1.41%) |
Quant Large Cap Fund – (-5.01%) |
|
Contra |
-3.18 |
SBI Contra Fund – (-2.37%) |
Invesco India Contra Fund – (-4.44%) |
|
Flexi Cap |
-3.20 |
Kotak Flexicap Fund – (-0.69%) |
Quant Flexi Cap Fund – (-6.02%) |
|
Focused |
-3.20 |
Union Focused Fund – (-0.37%) |
Mirae Asset Focused Fund – (-5.50%) |
|
Sectoral & Thematic |
-3.25 |
Franklin Asian Equity Fund – 8.52% |
Motilal Oswal Consumption Fund – (-10.23%) |
|
ELSS |
-3.46 |
Bank Of India ELSS Tax Saver – (-1.38%) |
ITI ELSS Tax Saver Fund – (-6.58%) |
|
Large & Mid Cap |
-3.52 |
Kotak Large And Midcap Fund – (-1.15%) |
Quant Large And Mid Cap Fund – (-8.13%) |
|
Multi Cap |
-3.75 |
Trustmf Multi Cap Fund – (-1.80%) |
Motilal Oswal Multi Cap Fund – (-6.64%) |
|
Mid Cap |
-3.78 |
HDFC Mid Cap Fund – (-1.59%) |
Quant Mid Cap Fund – (-7.61%) |
|
Small Cap |
-4.55 |
Baroda BNP Paribas Small Cap Fund – (-2.51%) |
Quant Small Cap Fund – (-7.44%) |
Source: AMFI
Debt Funds – Credit Risk Leads while Long Duration Falters
Within debt strategies, Credit Risk led both YoY and YTD category returns, indicating sustained leadership. Floater follows with solid performance, while Long Duration exhibits comparatively lower returns.
Return dispersion across Debt sub-categories shows an 8.39 percentage points difference between leaders and laggards, reflecting varied performance drivers within the segment. Leadership consistency between YoY and YTD for Credit Risk suggests continuation of prevailing market dynamics rather than recent rotation.
Table: YoY Performance
|
Sub-Category |
Category Return – YoY |
Top Performer |
Bottom Performer |
|
Credit Risk |
11.65 |
HSBC Credit Risk Fund – 20.97% |
Bandhan Credit Risk Fund – 7.09% |
|
Floater |
7.83 |
Franklin India Floating Rate Fund – 8.56% |
SBI Floating Rate Debt Fund – 6.97% |
|
Low Duration |
7.55 |
HSBC Low Duration Fund – 8.96% |
Bandhan Low Duration Fund – 7.22% |
|
Banking & PSU |
7.39 |
Franklin India Banking And PSU Debt Fund – 8.12% |
Canara Robeco Banking And PSU Debt Fund – 6.60% |
|
Ultra Short Duration |
7.07 |
Nippon India Ultra Short Duration Fund – 7.47% |
Motilal Oswal Ultra Short Term Fund – 6.19% |
|
Short Duration |
7.06 |
Axis Short Duration Fund – 8.31% |
ICICI Prudential Short Term Fund Div Option – 0.14% |
|
Medium Duration |
7.01 |
Kotak Medium Term Fund – 10.00% |
Union Medium Duration Fund – 0.00% |
|
Corporate Bond |
6.82 |
Axis Corporate Bond Fund – 8.16% |
PGIM India Corporate Bond Fund – (-1.50%) |
|
Gilt (10Y Constant Duration) |
6.78 |
Bandhan Gilt Fund With 10 Year Constant Duration Fund – 7.65% |
DSP 10Y GSEC Fund – 5.56% |
|
Money Market |
6.60 |
Tata Money Market Fund – 7.48% |
PGIM India Money Market Fund – (-0.08%) |
|
Medium to Long Duration |
5.93 |
Bank of India Conservative Hybrid Fund – 7.69% |
Bandhan Medium To Long Duration Fund – 4.65% |
|
Dynamic |
5.48 |
Mirae Asset Dynamic Bond Fund – 7.73% |
PGIM India Dynamic Bond Fund – 0.23% |
|
Liquid |
5.39 |
Canara Robeco Liquid Fund – 6.55% |
Franklin India Liquid Fund Institution – (-0.08%) |
|
Overnight |
4.77 |
Bank of India Overnight Fund – 5.76% |
PGIM India Overnight Fund – 0.00% |
|
Gilt |
4.67 |
Bandhan Gilt Fund With 10 Year Constant Duration Fund – 7.65% |
Union Gilt Fund – 2.13% |
|
Long Duration |
3.26 |
Franklin India Long Duration Fund – 5.15% |
Kotak Long Duration Fund – 1.99% |
Source: AMFI
Table: YTD Performance
|
Sub-Category |
Category Return – YTD |
Top Performer |
Bottom Performer |
|
Credit Risk |
0.88 |
Bank Of India Credit Risk Fund – 5.14% |
Bandhan Credit Risk Fund – (-0.03%) |
|
Liquid |
0.36 |
Unifi Liquid Fund – 0.45% |
Franklin India Liquid Fund Institution – (-0.03%) |
|
Overnight |
0.36 |
Franklin India Overnight Fund – 0.43% |
Groww Overnight Fund – (-0.05%) |
|
Ultra Short Duration |
0.28 |
Nippon India Ultra Short Duration Fund – 0.35% |
WhiteOak Capital Ultra Short Duration Fund – 0.22% |
|
Money Market |
0.28 |
Union Money Market Fund – 0.38% |
PGIM India Money Market Fund – (-0.04%) |
|
Low Duration |
0.21 |
Franklin India Low Duration Fund – 0.37% |
DSP Low Duration Fund – 0.15% |
|
Medium Duration |
0.19 |
Aditya Birla Sun Life Medium Term Plan – 1.67% |
DSP Bond Fund – (-0.22%) |
|
Floater |
0.16 |
SBI Floating Rate Debt Fund – 0.49% |
DSP Floater Fund – (-0.01%) |
|
Short Duration |
-0.04 |
Bandhan Short Duration Fund – 0.13% |
Sundaram Short Duration Fund Formerly Known As Principal Short Term Debt Fund – (-1.39%) |
|
Banking & PSU |
-0.06 |
Franklin India Banking And PSU Debt Fund – 0.19% |
DSP Banking And PSU Debt Fund – (-0.25%) |
|
Dynamic |
-0.06 |
Mirae Asset Dynamic Bond Fund – 0.26% |
Union Dynamic Bond Fund – (-0.46%) |
|
Corporate Bond |
-0.07 |
Franklin India Corporate Debt Fund – 0.20% |
Union Corporate Bond Fund – (-0.24%) |
|
Medium to Long Duration |
-0.09 |
ICICI Prudential Bond Fund – 0.16% |
Bank Of India Conservative Hybrid Fund – (-0.64%) |
|
Gilt (10Y Constant Duration) |
-0.11 |
ICICI Prudential Constant Maturity Gilt Fund – 0.03% |
DSP 10Y GSEC Fund – (-0.27%) |
|
Gilt |
-0.12 |
Franklin India GSEC Fund – 0.30% |
Union Gilt Fund – (-0.49%) |
|
Long Duration |
-0.18 |
Franklin India Long Duration Fund – 0.12% |
Kotak Long Duration Fund – (-0.44%) |
Source: AMFI