The number of Indian mutual fund schemes achieving over 10% annual returns has sharply decreased, highlighting a tougher, more uncertain investment environment amidst rising market volatility and shifting investor strategies.
The number of Indian mutual fund schemes delivering double-digit annual returns has fallen sharply, according to data cited by Business Standard from the Securities and Exchange Board of India, underscoring how much harder it has become to generate easy gains in a more unsettled market. In the latest fiscal year reviewed by Sebi, 198 schemes produced returns of more than 10%, down from 304 in the previous year and 822 in FY23. At the other end of the table, 93 schemes posted losses of 10% or more, up from 30 in FY25 and 12 in FY24.
Sebi said the pattern points to a “more subdued return environment driven by market volatility”. That diagnosis fits a tougher backdrop for Indian equities. The Nifty 50 fell 5% in FY26 after rising 4.7% in FY25 and gaining 29% in FY24, when the market’s broad advance helped lift a large swathe of funds almost regardless of strategy.
For some investors and advisers, FY24 now looks less like a normal year and more like an outlier. Harshal Dasani, business head at INVasset PMS, told Business Standard that the sharp fall in the number of double-digit performers reflects the end of a liquidity-fuelled phase in which markets rewarded exposure more than judgement. He argued that the recent compression in winners shows investors are no longer being paid simply for staying in the market and that future returns will depend more on stock selection, entry price and patience.
Ambareesh Baliga, an independent market expert, said the period from 2020 to 2024 was unusually generous and that many mutual funds benefited from a rising tide rather than especially skilful positioning. He added that the euphoric phase appears to be over for now, even if another strong run could eventually return. Riddhiman Jain, managing director and head of investment strategy and solutions at Waterfield Advisors, said active managers using benchmark-agnostic, bottom-up approaches have fared better than those staying close to the index, and argued that earnings growth still supports equities over a three- to five-year horizon.
Despite the weaker return profile, investor commitment through systematic investment plans has remained firm. SIP inflows hit a record ₹32,087 crore in March 2026, even as foreign investors sold ₹1.22 lakh crore that month, suggesting domestic investors have so far kept faith with the market. Dasani warned, however, that another year of single-digit returns could strain that patience, especially among newer investors whose expectations were shaped by the extraordinary gains of 2023 and 2024.
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