More Than One In Four Equity Mutual Funds Beat Benchmarks In January

A recent report by PL Wealth Management, a division of Prabhudas Liladhar, revealed that over one in four equity mutual funds in India outperformed their respective benchmarks in January 2025. The study analyzed 291 open-ended, diversified equity funds and found that 76 schemes managed to beat market indices during the month.

Decline in Total Assets and Performance Dip

The total assets under management (AUM) for equity mutual funds (excluding sectoral and thematic funds) stood at Rs 24,85,844 crore in January 2025. This marked a 3.83% decline from December 2024, when the AUM was Rs 25,84,851 crore. Notably, the percentage of schemes that outperformed their benchmarks fell sharply from 60.82% in December to just 26.12% in January, signaling a decline in overall fund performance.

Small Cap Funds Shine, Large Cap Funds Struggle

Among different fund categories, Small Cap Funds emerged as the top performers, with 86.21% of schemes surpassing their benchmark, the Nifty Smallcap 250 TRI. Equity Linked Savings Schemes (ELSS) followed, with 31.71% of funds outperforming, while 28.57% of Focused Funds exceeded their benchmarks.

On the other hand, Large Cap Funds faced a challenging month, with none of the schemes able to beat the Nifty 50 TRI benchmark. Flexi Cap Funds and Mid Cap Funds had mixed results, with 23.08% and 17.24% of schemes outperforming their respective benchmarks.

Long-Term Performance Holds Strong

Looking at a broader timeframe, the report examined the past year’s performance of 276 equity mutual funds. It found that 70.29% of these funds delivered returns higher than their benchmarks, only slightly lower than the 71.27% recorded in the previous month’s one-year analysis. This suggests that while short-term volatility exists, equity funds have remained strong over the long run.

The Power of SIPs in Wealth Creation

The report highlighted the benefits of staying committed to systematic investment plans (SIPs), particularly for long-term investors. It noted that SIPs in the top 25% of equity mutual funds have generated an average annual return of over 15% in the past three years. This steady growth reinforces the value of disciplined, regular investing, even in fluctuating markets.

PL Wealth Management report advises investors to stay committed to their SIP investments and focus on the long term. Despite fluctuations in the Indian stock market, SIP investments remained strong, reaching ₹26,400 crore in January.

“Investors should stay the course with their SIPs and focus on long-term goals,” the report advised. It emphasized that despite short-term market volatility, equity mutual funds—especially in categories like Small Caps—continue to provide solid growth opportunities. For those willing to be patient, the data suggests that long-term investing could yield significant rewards.