The number of mutual fund schemes posting negative annual returns jumped to 731 in FY26 from 243 in the previous year. Despite this performance slump, total assets under management grew 12.2% to ₹73.73 lakh crore. This highlights the contrast between steady retail inflows via SIPs and the impact of market volatility on overall fund performance.
The Indian mutual fund industry faced a challenging year in FY26, as market volatility significantly impacted the performance of various investment schemes. Official data confirms that the number of schemes recording negative annual returns surged to 731, nearly triple the 243 schemes that reported losses in the previous fiscal year. This shift indicates that even as the industry expanded in size, a large portion of individual portfolios struggled to generate positive returns due to broader market pressures.
The decline in performance was also reflected in high-performing funds. Schemes that managed to deliver returns exceeding 10% dropped to 198, compared to 304 in FY25. Meanwhile, the mid-range performance bracket saw significant activity; schemes recording losses between 0% and 5% rose sharply, illustrating how market fluctuations eroded the gains of many investors over the 12-month period.
Despite these performance headwinds, the industry showed signs of resilience in terms of total assets. The total assets under management (AUM) reached ₹73.73 lakh crore by the end of March 2026, marking a 12.2% increase from the previous fiscal year. This growth is largely attributed to continued retail participation and the popularity of systematic investment plans (SIPs). The number of unique investors grew by 13.2% to 6.1 crore, with strong interest coming from Tier-II cities, which saw a 37.6% rise in participation. The count of contributing SIP accounts also climbed to 10.45 crore, providing a consistent source of capital for the industry.
However, the gap between AUM growth and scheme performance highlights a change in investor behavior. While fresh money continued to flow in, redemptions rose by 16.5%, contributing to a 9.7% decline in overall net inflows to ₹7.4 lakh crore. This suggests that while many investors remained committed to long-term wealth creation, others chose to exit or book losses amid the volatility.
Another point for investors to note is the increase in unclaimed assets. Unclaimed mutual fund dividends rose by 15.7% to ₹2,689 crore by the end of FY26. This often happens when investors change bank accounts or contact details without updating their folios. Maintaining updated KYC and contact information remains a crucial step for investors to ensure they receive their payouts and manage their investments effectively.
As the industry enters a new fiscal year, the key monitorable will be whether market conditions stabilize to allow more schemes to recover. Investors may track monthly SIP contribution trends and redemption rates in quarterly updates to gauge whether the retail commitment remains strong despite the performance volatility seen in FY26.