Mutual Fund: Are mutual funds safe, or is trust now wavering? Only two schemes delivered returns of more than 10%...

Until a few years ago, "Mutual Funds are right" was a slogan that every investor blindly believed in. However, this belief has been shaken somewhat over the past year. The reason is clear: people continued to invest through SIPs and lump sums, but returns remained stagnant, with some even experiencing losses.

Over the past year, the equity market witnessed a climate in which most mutual fund schemes failed to perform. Both the Sensex and Nifty have delivered nearly flat returns over the past year, despite recovering by around 15 percent since April 2025. Selling by foreign investors, global economic uncertainty, and rising geopolitical tensions have dashed investor hopes.

Only two schemes saved the day.

If anyone truly demonstrated their strength during these difficult times, it was two funds: the SBI Banking & Financial Services Fund and the Invesco India Financial Services Fund.

The first fund delivered a return of 15.66%, while the second delivered 10.29%. All other equity funds either delivered single-digit returns or went into the negative. The hallmark of both funds is their focus on the banking sector – a sector that proved to be last year's star performer.

Why the Banking Sector Performed Greatly
Continued strong credit growth, rising profits, and improved balance sheets in the banking sector led to strong stock returns. Meanwhile, other sectors faced domestic and international pressure. Geopolitical instability in Europe and the Middle East, rising trade tariffs, and heavy selling by foreign portfolio investors (FPIs) dampened the market.

Recovery has occurred, but the impact remains.
The Sensex and Nifty touched 52-week lows in April 2025, after which they recovered by about 15 percent. However, the impact of this has not yet been fully reflected in mutual fund returns.

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