Mutual fund schemes with negative returns surge 3-fold in FY26; only 198 deliver over 10% returns: SEBI annual report

The performance of mutual funds weakened significantly in FY26, with the number of schemes reporting negative annual returns nearly tripling from the previous financial year, according to data in the Securities and Exchange Board of India’s (SEBI) annual report for 2025-26.

The number of schemes generating negative returns rose to 731 in FY26 from 243 in FY25. At the same time, the number of schemes delivering returns of more than 5% fell sharply to 737 from 1,156 in FY26.

Schemes with negative returns rose sharply

“The distribution of mutual fund schemes reflected subdued market performance during 2025-26,” the SEBI annual report noted.

Schemes reporting returns of -10% or lower increased more than threefold, from 30 in FY25 to 93 in FY26. Meanwhile, the number of schemes generating returns between -10% and -5% jumped from 41 to 146.

The largest increase was seen among schemes in the -5% to 0% return range. Their number rose from 172 in FY25 to 492 in FY26.

Together, these three categories accounted for 731 schemes with negative returns in FY26, compared with 243 a year earlier.

Fewer schemes crossed 10% return thresholds

The number of schemes generating positive but relatively modest returns increased in the 0% to 5% category. There were 373 schemes in this range in FY26, compared with 218 in FY25.

However, the number of schemes delivering returns between 5% and 10% fell from 852 in FY25 to 539 in FY26.

The decline was even more pronounced at the higher end of the return spectrum. “The count of schemes generating returns exceeding 10 per cent declined from 304 to 198, highlighting a more subdued return environment driven by market volatility,” the annual report mentioned.

Mutual fund scheme launches stayed flat, investor base expanded

The number of new mutual fund schemes launched during FY26 remained largely unchanged from the previous financial year. A total of 246 schemes were launched in FY26, compared with 247 a year earlier. Of these, 244 were open-ended schemes and two were close-ended schemes.

Within open-ended schemes, the number of debt-oriented fund launches increased to 16 in FY26 from 10 in FY25, while equity-oriented fund launches declined to 63 from 70. Hybrid fund launches increased to 15 from 12.

Other schemes accounted for 150 launches in both FY25 and FY26. Meanwhile, the number of domestic fund of funds (FoFs) launched increased to 49 in FY26 from 14 in the previous financial year.

However, the mutual fund industry saw a notable expansion in its investor base. The number of unique investors increased by 13.2% to 6.1 crore in FY26, from 5.4 crore a year earlier.

Disclaimer: This is purely for educational/ informational purposes and should not be taken as any sort of investment advice. Always consult a SEBI-registered advisor before making any investment decisions.