54% of equity mutual funds outperform respective benchmarks in Feb 2025

February 2025 saw a significant improvement in the performance of open-ended equity diversified funds, with 54.08% of funds outperforming their respective benchmarks over the past month, ending February 28th. This marks a considerable increase from the previous month, where only 26.12% of the schemes were able to beat their benchmarks, shows data analysed by PL Wealth, the wealth management arm of  PL Capital.

 

While the broader market faced a downturn, with the Nifty 50 TRI posting a -3.49% return, the Nifty Mid Cap 150 TRI and Nifty Small Cap 250 TRI falling by -6.58% and -8.46%, respectively, equity diversified funds continued to perform well. Over the one-year period ending February 2025, 67.02% of funds outperformed their benchmarks, although this was a slight decline from the previous month's 70.29%.

 

 

Looking at market performance, the Nifty 50 TRI returned 2.04%, while Nifty Mid Cap 150 TRI returned 0.54%, and Nifty Small Cap 250 TRI showed a negative return of -6.50%.

 

The AUM (assets under management) of equity mutual funds—excluding Sectoral/Thematic Funds—declined by 6.97% sequentially, dropping to Rs 23,12,570.67 crore in February 2025 from Rs 24,85,843.60 crore in January 2025. The study, which analysed 294 open-ended equity diversified funds, found that 54.08% of these funds outperformed their respective benchmarks over the past month, ending February 28, 2025. In total, 159 funds recorded outperformance during this period. 

 

Small Cap Funds was the best performing category where 79.31% of the schemes outperformed the benchmark. It was followed by Focused Funds and Large & Mid Cap Funds which outperformed their respective benchmarks by 67.86% and 65.63% respectively during the month of February 2025. 

 

Large Cap funds were the least performing fund category with 21.88% of funds outperforming the benchmark.

 

"For long-term investors, Systematic Investment Plans (SIPs) remain a strong recommendation. Over the past three years, top quartile equity funds have yielded an impressive return of over 12% annually on average, reinforcing the importance of maintaining a long-term focus in the equity market.

 

Despite recent volatility, investors are encouraged to stay committed to their SIP investments, capitalizing on the potential for sustained growth in the coming years," said Pankaj Shrestha, Head - Investment Services at PL Wealth.