Equity mutual funds lose up to 48% on SIP investments in FY26. Have you added any to your portfolio?

Equity mutual funds lost up to 48% on SIP investments in FY26, an analysis by ETMutualFunds showed. There were 556 funds in the said time period, of which 486 funds were in red territory whereas the other 70 funds were in green.

A further analysis showed that domestic mutual funds were in the negative territory whereas the ones in positive territory were most international funds.

Two tech funds - Quant Teck Fund and Motilal Oswal Digital India Fund lost the most of around 47.17% and 35.38% respectively in the financial year that started on April 1, 2025 and will end on March 31, 2026 (As on March 23, 2026).


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Tata Small Cap Fund was down 32.56% on SIP investments made in FY26. Three other technology sector based funds - HDFC Technology Fund, Tata Digital India Fund, and Aditya Birla Sun Life Digital Fund - lost 31.79%, 30.13%, and 29.63% respectively on SIP investments in FY26.

Two funds from Motilal Oswal Mutual Fund - Motilal Oswal Midcap Fund and Motilal Oswal Multi Cap Fund lost 28.36% and 27.68% respectively in FY26. Two consumption theme based funds - Bajaj Finserv Consumption Fund and Sundaram Consumption Fund delivered a negative return of 25.74% and 25.42% respectively.

Two funds from Invesco India Mutual Fund - Invesco India Technology Fund and Invesco India Multicap Fund were down 23.47% and 23.39% respectively on SIP investments in FY26. Two other consumption funds - Canara Rob Consumer Trends Fund and Mirae Asset Great Consumer Fund delivered negative returns of 22.01% and 21.98% respectively on SIP investments.

Kotak Small Cap Fund lost 20.78% on SIP investments made in FY26. Another small cap fund, HDFC Small Cap Fund delivered a negative return of 19.66% in the said time period. Two other small caps - ICICI Prudential Smallcap Fund and SBI Small Cap Fund - lost 18.96% and 18.95% respectively on SIP investments.

Mirae Asset Hang Seng TECH ETF FoF, an international fund, lost 18.43% on SIP investments. Quant Small Cap Fund lost 16.86% on SIP investments in FY26.

Quant Mid Cap Fund was down 15.53% in FY26. Four funds from ICICI Prudential Mutual Fund - large cap fund, housing opportunities fund, flexicap fund, focused fund - lost between 13.58% to 13.65% in FY26 on SIP investments.

Parag Parikh Flexi Cap Fund lost 10.08% on SIP investments. The multi cap and large & midcap fund by Kotak Mutual Fund were down 9.62% and 9.52% respectively. HDFC Defence Fund-, the only actively managed fund based on the defence sector, was down 4.99% on SIP investments.

Mirae Asset Healthcare Fund and Kotak Healthcare Fund were the last ones to deliver negative returns on SIP investments. These were down 0.19% and 0.08% respectively.

SIP strategy for FY27

With all domestic funds down in FY26, where should investors focus now? Vishal Dhawan, Founder & CEO, Plan Ahead Wealth Advisors told ETMutualFunds that for SIPs, the better approach is to keep the core allocation in diversified India and/or broader international funds, while using specific country or thematic exposure is taken as a satellite exposure and the recent outperformance reflects a strong country and sector cycle, which may not continue at the same pace going forward.

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Dhawan further said that a sensible strategy would be to stagger SIPs gradually, avoid return-chasing, and rebalance periodically. In short, international exposure should be used to diversify the portfolio, but a narrow Taiwan or technology theme should not become the main SIP strategy.

Another expert, Manish Kothari, CEO & Co-founder, ZFunds shared with ETMutualFunds that for investors looking to diversify beyond India, SIPs can be strategically allocated to global growth themes and for investors looking for international exposure some themes can be AI, tech or US and China focussed funds.

Outperformers

Nippon India Taiwan Equity Fund stood out as the top performer and delivered a return of 164% on SIP investments in FY26. ICICI Pru Strategic Metal and Energy Equity FoF was the other fund to deliver triple digit return on SIP investments. The fund gave 101.22% return.

Edelweiss Greater China Equity Off-shore Fund delivered 38.91% return, followed by HSBC Asia Pacific (Ex Japan) DYF which gave 38.87% return on SIP investments.

Motilal Oswal Nasdaq 100 FOF gave a return of 20.28% on SIP investments. Mirae Asset S&P 500 Top 50 ETF FoF delivered 18.51% return. ICICI Pru US Bluechip Equity Fund offered 11.18% on SIP investments, it was the last fund to deliver double digit gains.

Mirae Asset NYSE FANG+ETF FoF gave 5.81% in FY26. SBI PSU Fund offered a return of 4.40% on SIP investments in FY26. WOC Pharma and Healthcare Fund was the last one to deliver positive returns. The fund gave 0.06% return on SIP investments.

Why did international funds shine in FY26?

Kothari said these have been AI and tech driven rallies, SIP is never done with a 2 or 3 year view as it is by design is a product meant to be a disciplined, affordable, and flexible way to build wealth, reducing risks associated with market volatility.

“It is always done with a 10 or 15 year view. When we look at longer horizons, most funds' performance average out. Even if we look at the last 5-year returns, Indian equities have delivered strong returns.”

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On whether to diversify to international exposure, Kothari said we always recommend an allocation based approach. 10-20% portfolio allocation to international exposure, primarily focused on US markets, with selective exposure to others - the selective exposure being dependent on their risk appetite and personal outlook.

To this, Dhawan said many international markets and themes are now trading at elevated valuations. At the same time, the normalization of India’s premium to emerging markets has improved relative valuation comfort in India, while domestic earnings and macro indicators are showing early green shoots. International exposure is still a good strategy, but it should be taken for geographical diversification and risk mitigation benefits , and not driven by the strong recent returns.

We considered all regular and growth options. We considered all equity mutual funds including sectoral, thematic and international funds. We calculated SIP performance from April 1, 2025 to March 23, 2026)

Note, the above exercise is not a recommendation. The exercise was done to identify how SIP investments performed in FY26.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)

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