MF schemes with 10%+ gains fall by 3/4th in FY26; is easy money era over?
Market regulator Sebi’s annual report for financial year 2025-26 (FY26) shows that 198 schemes delivered 10 per cent-plus gains in the last fiscal year, as against 304 in FY25 and a whopping 822 in FY23. For this study, Sebi considered annual returns for the direct plan growth option of schemes.
MF schemes’ annual returns
Sebi, in its report, said that this trend signals a “more subdued return environment driven by market volatility”.
In FY26, the Nifty 50 index declined 5 per cent, while rising 4.7 per cent in FY25 and gaining a solid 29 per cent in FY24.
Era of easy money over?
Harshal Dasani, business head at INVasset PMS, said that FY24 was the anomaly, not FY26. He noted that a year in which 822 schemes delivered double digits was a liquidity event and it taught a generation of investors the wrong lesson about what markets owe them.
“The compression to 198 winners, and the rise of laggards, reflects a market that corrected, absorbed the heaviest foreign selling of this cycle, and stopped paying investors for simply showing up,” Dasani added.
He further believes that the era of easy double-digit returns, where beta did all the work, is genuinely ending. However, this era of double-digit returns is not.
“Corporate earnings compounding broadly alongside nominal GDP remains the gravitational anchor for Indian equity returns, but capturing it now demands what the easy years never did: selection, entry-price discipline, and patience through flat stretches,” he noted.
His views are echoed by independent market expert Ambareesh Baliga who said that from 2020 till 2024, market gave exceptional returns and most mutual fund schemes would have done very well without much of an effort.
This trend has brought the importance of active fund management to the fore.
“Fund managers who follow benchmark agnostic bottom up investing have been clear winners rather than benchmark+ managers. In the long term earnings drive market returns. Based on the recent earnings, we are confident equities as an asset class can be a preferred choice for investors with a 3-5 year hotizon,” said Riddhiman Jain, MD and head of investment strategy and solutions, Waterfield Advisors.
The vulnerable cohort are the 2023-24 investors, whose expectations were calibrated by extraordinary portfolio growth and who quietly believe SIP is a product that returns 15 percent rather than a discipline that averages a volatile asset, said Dasani. “Another year of single-digit returns would test them, and rising SIP stoppage ratios would be the early warning.”
Disclaimer: Views and outlook shared belong to the respective brokerages/analysts and are not endorsed by Business Standard. Readers’ discretion is advised.
