Market Reality Check: What Happened in FY26?
The latest analysis by ETMutualFunds has revealed a sharp correction in the market. Out of 556 schemes analyzed, nearly 486 equity mutual funds delivered negative SIP returns, with losses going as deep as 48%.
👉 Only 70 funds managed to generate positive returns, highlighting how challenging FY26 has been for investors.
This data clearly indicates that short-term volatility can significantly impact even disciplined SIP investors.
Top Losers: Which Funds Were Hit the Hardest?
Technology-focused funds were among the worst performers:
- Quant Teck Fund: -47.17%
- Motilal Oswal Digital India Fund: -35.38%
- Tata Small Cap Fund: -32.56%
Other notable declines:
- HDFC Technology Fund: -31.79%
- Tata Digital India Fund: -30.13%
- Aditya Birla Sun Life Digital Fund: -29.63%
Even diversified and mid-cap strategies struggled:
- Motilal Oswal Midcap Fund: -28.36%
- Motilal Oswal Multi Cap Fund: -27.68%
👉 This clearly shows that sector concentration and mid/small-cap exposure amplified downside risks.
Sector-Wise Impact
1. Technology Funds
- Biggest losers due to global correction in tech stocks
2. Consumption Funds
- Declined ~20–25%
- Example: Bajaj Finserv Consumption Fund
3. Small Cap Funds
- Kotak Small Cap Fund: -20.78%
- HDFC Small Cap Fund: -19.66%
4. Healthcare Funds (Least Impacted)
- Mirae Asset Healthcare Fund: -0.19%
- Kotak Healthcare Fund: -0.08%
👉 Defensive sectors like healthcare proved more resilient.
Why International Funds Outperformed
Interestingly, most funds that delivered positive returns were international funds.
Top performers:
- Nippon India Taiwan Equity Fund: +164%
- ICICI Prudential Strategic Metal & Energy FoF: +101%
- Edelweiss Greater China Fund: +38.91%
- Motilal Oswal Nasdaq 100 FoF: +20.28%
Key Reasons:
- AI & tech rally in global markets
- Strong US market performance
- Currency advantage (USD strength)
👉 This highlights the importance of global diversification in your portfolio.
What Should Investors Do in FY27? (Expert Strategy)
Financial experts recommend a balanced and disciplined approach:
1. Continue SIPs (Don’t Panic)
SIPs are designed for 10–15 year horizons, not short-term gains.
2. Focus on Diversification
Maintain allocation across:
- Domestic diversified funds
- International funds (10–20%)
3. Avoid Overexposure to Themes
- Don’t rely heavily on tech or single-country funds
- Avoid chasing recent top performers
4. Rebalance Regularly
- Review portfolio every 6–12 months
- Adjust based on market conditions
Where Should You Invest Now?
At GFS, we recommend focusing on:
👉 Diversified portfolios instead of risky themes
👉 Long-term SIP strategies over short-term reactions
Explore carefully selected
Best equity funds
that match your financial goals
And build a strong foundation through
equity mutual funds
designed for long-term wealth creation
Key Takeaways
✔ FY26 was a tough year for equity investors
✔ 486 out of 556 funds delivered negative returns
✔ Tech & small-cap funds were hit the hardest
✔ International funds outperformed due to global trends
✔ SIP remains the best strategy for long-term investing
GFS Conclusion
Market corrections like FY26 are not failures—they are opportunities in disguise.
At GFS, we believe:
- Volatility is temporary
- Discipline builds wealth
- Diversification reduces risk
Instead of stopping your investments, this is the time to:
✔ Stay consistent with SIPs
✔ Invest in fundamentally strong funds
✔ Add global exposure strategically
👉 The real winners in equity mutual funds are not those who time the market—but those who stay invested through cycles.