Mutual Fund Asset Class Returns 30Jun2026
(This is my 522nd blog since 2010. Over the years, I have covered global financial markets, with a focus on India, and continue to share insights to help readers understand complex topics in simple language.
The views expressed here are for information purposes only and should not be construed as a recommendation or investment advice. While the author is a CFA Charterholder with nearly 25 years of experience in financial markets, this content is intended to share general insights and does not constitute financial guidance.
Please consult your financial adviser before taking any investment decision. Safe to assume the author has a vested interest in stocks / investments discussed if any.)
This is an update to my earlier blog, published on 15Jan2026, which analysed mutual fund returns up to 31Dec2025. This edition reviews the latest data available as at 30Jun2026.
The analysis covers 21 mutual fund categories across equity, debt, hybrid and commodity (gold and silver) funds. Its main purpose is to identify categories that have delivered similar returns over time.
This may help investors simplify their portfolios by avoiding unnecessary overlap and choosing a smaller number of categories that can meet their investment objectives.
If two categories have delivered almost identical outcomes over many years, there may be little benefit in holding both, unless they serve different investment objectives or tax purposes.
Analysis continues below
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Related blogs:
Mutual Fund Asset Class Returns 31Dec2025 (MF categories with similar returns)
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1 Trailing returns
The most striking observation is that several seemingly different fund categories have delivered remarkably similar long-term returns.
Aggressive hybrid funds and large cap funds have generated almost identical returns over three, five and ten years. Investors expecting one category to consistently outperform the other would have been disappointed.
Similarly, Flexi Cap and ELSS funds have produced almost the same long-term returns. The principal distinction between them is not performance but taxation.
ELSS funds qualify for tax deduction under the old tax regime, while Flexi Cap funds offer greater flexibility without a lock-in period.
Among hybrid funds, conservative hybrid and equity savings funds also display very similar return patterns over all periods.
Debt funds exhibit an even stronger convergence. Banking and PSU, corporate bond, floater, gilt and dynamic bond funds have all delivered annualised returns in a fairly narrow range over five and ten years.
Credit risk funds have earned somewhat higher returns, but investors should remember that these come with higher credit risk.
Likewise, arbitrage funds and liquid funds have produced almost identical long-term returns despite investing in different instruments (they have different tax implications).
The message is straightforward. Many categories that appear different have rewarded investors in much the same way over long periods.
Table 1 showing trailing returns, for various periods, of 21 MF categories >
Category assets are added in the table so that readers can make out how popular a particular category is with the investors.
2 Annual returns
The annual return table tells a complementary story.
Returns can differ sharply from one year to another, particularly in equity funds. Mid cap and small cap funds have enjoyed spectacular years, followed by periods of weak or negative returns.
Gold too has alternated between ordinary and exceptional years.
These short-term fluctuations often tempt investors to switch categories in search of the latest winner. However, leadership changes frequently. Yesterday's best performer can easily become tomorrow's laggard.
By contrast, categories with similar long-term returns may look quite different over one or two years. Investors should therefore avoid drawing conclusions from recent performance alone.
Table showing annual returns (2016 to 2025), for various periods, of 21 MF categories >
3 Investment Implications
Many investors accumulate mutual funds over time, often ending up with six, eight or even ten categories. This creates the appearance of diversification but frequently results in overlap.
If two categories have delivered similar returns over long periods, holding both may add complexity without materially improving expected returns. Investors should instead ensure that each category serves a distinct purpose within the portfolio.
For example, an investor may combine a broad-based equity category such as Flexi Cap or Large Cap with a Mid Cap or Small Cap fund for higher growth potential, a debt category for stability, and perhaps gold for diversification.
Such a portfolio may achieve the desired asset allocation without spreading investments across numerous categories with similar return characteristics.
This does not mean that one category is always a substitute for another. Tax treatment, investment mandate, volatility and liquidity also matter.
Nevertheless, return history suggests that investors should first ask whether an additional category genuinely improves the portfolio before adding it.
4 Conclusion
Historical returns cannot predict future performance. However, they can reveal useful patterns.
The data suggest that several mutual fund categories have delivered remarkably similar long-term returns despite differences in labels and investment mandates. Investors may therefore benefit more from selecting a few distinct categories than from holding many overlapping ones.
In investing, simplicity is often an advantage. A portfolio built around a small number of well-chosen categories is generally easier to understand, monitor and rebalance than one containing numerous funds that ultimately deliver similar outcomes.
The analysis is based on historical returns and should not be construed as a prediction of future performance or as investment advice.
Check below for references and additional notes.
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Additional data:
Screenshots of annual and trailing returns from Value Research >
Mutual Fund Asset Class Returns 31Dec2025
Mutual Fund Asset Class Returns 31Dec2022
