The number of mutual fund schemes that ended the financial year with negative annual returns nearly tripled in FY26, even as the industry continued to expand in terms of assets and investor participation, according to an analysis published by The Hindu BusinessLine.
The number of schemes posting negative annual returns rose to 731 in FY26 from 243 a year earlier. At the same time, schemes delivering returns of more than 10 per cent fell to 198 from 304.
The deterioration was visible across different return brackets. Schemes with returns between zero and minus 5 per cent increased to 492 from 172. Those in the minus 5 per cent to minus 10 per cent range rose to 146 from 41, while schemes losing 10 per cent or more increased to 93 from 30.
On the positive side, the number of schemes delivering more than 5 per cent returns fell to 737 from 1,156. Schemes generating returns between 5 per cent and 10 per cent also declined to 539 from 852.
FY26 proved a difficult year for equity funds
The broader performance data reflects the challenging year for equity-oriented mutual funds. An Economic Times analysis of 556 equity mutual fund schemes found that 486 were in negative territory for FY26, while only 70 posted positive returns. Domestic funds were largely among the laggards, while several international funds performed better.
The final month of the financial year was particularly difficult. All 299 equity mutual fund schemes tracked in another analysis posted losses in March, with 224 recording double-digit declines. The Sensex and Nifty 50 also fell by more than 11 per cent during the month.
Industry continues to expand despite weaker returns
The rise in loss-making schemes came even as India's mutual fund industry continued to grow. SEBI's FY26 data shows the industry had thousands of schemes and a large investor base by March 31, 2026, with scheme-wise folio and asset data recorded across categories.
AMFI data also shows that the industry's assets under management stood at Rs 82.22 lakh crore at the end of June 2026, while total mutual fund folios reached 27.86 crore. Equity, hybrid and solution-oriented schemes accounted for about 21.23 crore folios.
The FY26 numbers therefore highlight a mixed picture for the mutual fund industry: investor participation and assets continued to rise, but a much larger share of schemes delivered negative annual returns during the year