Get Instant Loan up to ₹10 Lakh!
Only 26.12% of equity MFs outperformed benchmarks in January; smallcap funds lead: PL Wealth Study
PL Wealth Management's study reveals a 3.83% decline in equity mutual fund AUM, totaling ₹24.85 lakh crore in January 2025. Only 26.12% of funds outperformed benchmarks, with small cap funds leading performance. Large cap funds struggled, showing no outperformance amid market challenges.
PL Wealth Management and PL Capital, the wealth management arm of Prabhudas Lilladher, released its latest study on mutual fund performance, highlighting a decline in the assets under management (AUM) of equity mutual funds. The report noted that AUM fell by 3.83 percent sequentially to ₹24,85,844 crore in January 2025 from ₹25,84,851 crore in December 2024 (excluding sectoral and thematic funds).
The study, based on 291 open-ended equity diversified funds, indicated that only 26.12 percent of these funds managed to outperform their respective benchmarks over the past month, ending January 31, 2025. In total, 76 funds delivered benchmark-beating returns during this period.
Small Cap Funds Emerge as Top Performers
Among the different mutual fund categories, small cap funds emerged as the best-performing segment, with 86.21 percent of schemes outperforming their respective benchmarks. These funds benefited from renewed investor interest in high-growth small-cap stocks, despite broader market volatility.
Equity Linked Savings Schemes (ELSS) and Focused Funds also showed notable performance, with 31.71 percent and 28.57 percent of schemes in these categories surpassing their benchmarks, respectively, during January 2025. ELSS funds likely gained traction due to tax-saving investments typically made during the final quarter of the financial year.
Value Contra Div. Yield Funds were also strong with 27.27 percent outperforming benchmarks while for Flexi Cap Fund, the figure was 23.08 percent.
Large Cap Funds Struggle
On the other hand, large cap funds faced significant challenges, with none of the schemes in this category managing to outperform their benchmark. The underperformance of large cap funds suggests that blue-chip stocks struggled amid broader market headwinds, limiting growth potential for funds focused on this segment.
Meanwhile, only 10.34 percent Multi Cap Funds witnessed outperformance in January 2025 while 12.90 percent Large & Mid Cap Funds overtook benchmarks in the previous month.
January MF data
Equity mutual fund inflows saw a slight decline of 3.6 percent in January, totaling ₹39,687 crore, compared to ₹41,155 crore in December, according to data released by the Association of Mutual Funds in India (AMFI) on February 12. Despite the dip, net investments in open-ended equity funds remained positive for the 47th consecutive month, indicating sustained investor confidence.
As of January 2025, the total number of mutual fund folios stood at 22,91,99,377. Retail mutual fund folios, which include equity, hybrid, and solution-oriented schemes, rose to 18,22,23,078 in January, up from 17,89,93,911 in December 2024. This steady increase highlights retail investors' ongoing participation in mutual funds despite market fluctuations.
Systematic Investment Plan (SIP) contributions remained resilient, crossing the ₹26,000 crore mark once again. January recorded total SIP inflows of ₹26,400 crore, slightly lower than December’s ₹26,459 crore, reflecting a marginal dip of just 0.2 percent.
The primary decline in inflows was observed in flexi cap and large cap funds. Contributions to flexi cap equity funds fell from ₹5,697 crore in December to ₹4,730 crore in January. Similarly, large cap fund contributions dropped from ₹3,063 crore to ₹2,010 crore during the same period, signaling a shift in investor preference.
Market Outlook
The findings indicate a mixed outlook for mutual fund investors, with small cap and select diversified funds performing better, while large cap-focused investments lagged behind. With market volatility and economic factors playing a crucial role, fund managers may continue to focus on active stock selection and sectoral allocation to navigate uncertainties.
Investors looking to optimize their mutual fund portfolios may need to assess fund performances closely, considering the shifting dynamics across market segments.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before taking any investment decision.
Catch all theBudget News,Business News, Mutual Funds news,Breaking NewsEvents andLatest News Updates on Live Mint. Download TheMint News App to get Daily Market Updates.
Business NewsMutual FundsOnly 26.12% of equity MFs outperformed benchmarks in January; smallcap funds lead: PL Wealth Study
First Published:26 Feb 2025, 12:44 PM IST
- Top Gainers
- Top Losers
- 52 Week High