In 2025, Indian mutual funds have seen ups and downs, but about 70% of them have given positive returns so far (YTD).
While equity funds have been mostly weak, funds related to gold, defense, and BFSI have performed well.
Top and Bottom Performers
The table shows average returns for different fund types:
| Category | YTD (%) | 1-Year (%) | 3-Year (%) |
|---|---|---|---|
| Defense Funds | 30.23 | 12.40 | – |
| Gold Funds | 24.42 | 30.33 | 21.48 |
| Silver Funds | 11.92 | 5.54 | 14.49 |
| BFSI Funds | 8.38 | 15.69 | 20.11 |
| Bank Funds | 8.21 | 8.36 | 19.00 |
| PSU Funds | 4.24 | -5.52 | 34.99 |
| Large Cap Funds | 2.96 | 6.07 | 17.29 |
| ESG Funds | 1.66 | 8.24 | 16.87 |
| Auto Funds | 1.52 | -0.98 | 28.67 |
| Focused Funds | 0.18 | 7.51 | 18.60 |
| Value Funds | 0.04 | 4.46 | 21.57 |
| Flexicap Funds | -0.50 | 6.21 | 18.89 |
| Manufacturing Funds | -0.71 | 1.32 | 23.29 |
| Infrastructure Funds | -0.93 | -0.37 | 28.64 |
| Consumption Funds | -1.72 | 7.38 | 18.98 |
| Midcap Funds | -1.77 | 7.11 | 23.89 |
| Multicap Funds | -1.86 | 7.18 | 22.86 |
| Business Cycle Funds | -2.22 | 4.90 | 21.71 |
| Large & Midcap Funds | -2.43 | 2.46 | 21.25 |
| Innovation Funds | -5.11 | 9.42 | 17.01 |
| Pharma & Healthcare | -6.26 | 17.93 | 22.68 |
| Realty & Housing | -6.34 | -3.57 | 22.00 |
| Small Cap Funds | -6.36 | 5.74 | 24.27 |
| Momentum Funds | -8.34 | -8.74 | 20.85 |
| Digital India Funds | -10.20 | 11.04 | 16.30 |
| IT Funds | -11.26 | 12.27 | 13.34 |
Data as of May 28, 2025 (Source: ACE MF, Moneycontrol)
Market Returns Stay Low
From January 1 to May 28, 2025:
Nifty 50 rose by 4.68%
Nifty Midcap 150 fell by 0.46%
Nifty Smallcap 250 dropped by 5.89%
At the start of the year, the drop was even sharper. Nifty 50 was down by 9%, and small and midcap indices had fallen up to 26%.
Fund Managers Stay Alert
Nirav Karkada from Fisdom Wealthtech said the early-year drop was a healthy correction. It made valuations more attractive and helped thematic funds find good opportunities.
Out of about 1,800 mutual fund schemes in India, 1,650 have at least five months of data. Of these, 1,162 gave positive YTD returns in 2025.
Gold Outshines All
The best performing fund so far is DSP World Gold Fund of Funds, which invests in gold and mining companies. It gained from a 25%+ jump in global gold prices.
Indian gold funds also did well, with an average YTD return of 24%.
According to a Motilal Oswal report, trade tensions, geopolitical risks, stock market volatility, and a weak US dollar helped drive gold prices up.
Defense Funds Lead
Defense sector funds are the top-performing category in 2025, with an average return of over 30%.
The rise came after an Indo-Pak war and government approval of ₹54,000 crore in defense spending. Positive sentiment around defense stocks also helped.
BFSI Funds Do Well
Funds related to banking and financial services gave an average YTD return of 8%.
Kirtan Shah from Credence Wealth said that many top banks were trading at pre-COVID prices in March 2025, creating a clear value investing opportunity.
