Only 39% of equity funds beat benchmarks in March: Large Caps lead the pack

Large Cap Funds was the best performing category where 71.88% of the schemes outperformed the benchmark.

Active fund managers struggled to keep pace in March 2025. According to the latest data analysed by PL Wealth Management, PL Capital’s Wealth Management arm, only about 39 per cent of diversified equity mutual funds managed to beat their benchmarks in March 2025, a sharp dip from the 54% that outperformed in February.

 

The latest mutual fund performance study by PL Wealth Management shows that the equity mutual fund universe—excluding sectoral and thematic schemes—saw AUM rise 7.68%, growing from Rs 23.13 lakh crore in February to Rs 24.90 lakh crore in March 2025. However, only 38.64% of the 298 open-ended diversified equity mutual funds managed to outperform their respective benchmarks during the month.  Category-wise Performance of Equity Mutual Funds 

 

Large Cap Funds led the pack, with nearly 72% of schemes outperforming the Nifty 50 TRI—a rare win for actively managed large-cap strategies. In contrast, only 10% of Small Cap Funds managed to beat the Nifty Smallcap 250 TRI, despite the index’s impressive 9.10% return in March. 

 

One-Year Perspective: Outperformance Slips

For the 12 months ended March 2025:

• Nifty 50 TRI: 6.65%
• Nifty Midcap 150 TRI: 8.17%
• Nifty Smallcap 250 TRI: 6.02%

 

Out of 271 equity diversified funds, 57.56% beat their benchmarks, down from 67.02% in February. This trend suggests that alpha generation has become more difficult as markets turn more selective.

 

SIPs Remain a Bright Spot

Despite short-term fluctuations in fund performance, Systematic Investment Plans (SIPs) continued to deliver steady returns. Over a 3-year period, SIPs in top-quartile equity funds generated average annual returns of over 12%, proving once again that disciplined, long-term investing pays off.

 

Key Takeaways for Investors:

Stick with SIPs: Volatility is part of the journey. Long-term investors using SIPs are still seeing solid returns.

 

Don’t chase short-term winners: Just 10% of small-cap funds beat their benchmark despite the index surging. Index returns don’t guarantee fund success.

 

While market momentum favored small- and mid-caps in March, the real winners were large-cap fund managers who successfully outperformed in a tough environment.   "Out of the 271 open-ended equity diversified funds, about 57.56% of the funds were able to outperform their respective benchmarks over the past one year, ended March, 2025. Previous month, 67.02% of the schemes were able to beat their benchmarks.Investors are advised to stick to their SIP investments and keep a long-term focus. SIPs over the past 3-years have yielded a return in excess of 12% p.a. on an average for the top quartile equity funds," said the study.