Mutual Fund Returns Plummet: Negative Schemes Triple in FY26

The SEBI annual report for 2025-26 indicates a significant weakening in mutual fund performance during FY26. The number of schemes reporting negative annual returns nearly tripled, while fewer schemes delivered over 10% returns.

Specifically, the number of mutual fund schemes with negative annual returns surged from 243 in FY25 to 731 in FY26. This challenging environment saw schemes with returns of -10% or lower more than triple, rising from 30 to 93.

Further, schemes between -10% and -5% increased from 41 to 146, with the largest surge occurring in the -5% to 0% range, which grew from 172 to 492 schemes. These figures from the SEBI report highlight the broad impact of market volatility.

Downturn in High-Performing Schemes

While some schemes maintained positive, albeit modest, returns, the higher-performing categories experienced a notable contraction. Schemes yielding 5% to 10% returns dropped significantly, falling from 852 to 539.

The number of schemes exceeding 10% returns also declined considerably, decreasing from 304 to 198. This reflects a subdued market environment and increased volatility impacting higher-growth opportunities.

Industry Resilience Amid Performance Dip

Despite the challenging performance across many schemes, the mutual fund industry demonstrated growth in other key areas. The number of new scheme launches remained stable in FY26 at 246, compared to 247 in FY25.

The industry also saw a notable expansion in its investor base, which grew by 13.2% to 6.1 crore unique investors in FY26. This is an increase from 5.4 crore unique investors recorded in FY25, indicating continued market penetration.

The SEBI annual report for FY26 therefore presents a complex picture for India’s mutual fund sector. While scheme performance faced significant headwinds, the industry successfully expanded its reach and investor participation.