Biggest Losers – 10 Mutual Funds Down the Most in 6 Months of 2025

Mutual funds are often seen as one of the safest ways to invest in the market because they spread money across multiple stocks, bonds, or other securities. However, they are not completely risk-free. Market cycles, sector-specific downturns, and global economic factors can cause even the most popular schemes to fall sharply. Over the last six months, several sectoral and thematic mutual funds, particularly those in the technology and digital space, have faced steep declines in returns.

In this article, we highlight the 10 mutual funds that crashed the most in the last six months of 2025. We will also look at why these schemes fell, their risk factors, and what investors should do next.

What are Mutual Funds?

A mutual fund pools money from multiple investors and invests in a portfolio of stocks, bonds, or other assets. These funds are managed by professionals and are designed with a stated investment objective. While diversified equity or hybrid funds spread the risk, sectoral and thematic funds concentrate investments in one industry or theme. This focused exposure can generate high returns in good times but also increases vulnerability during downturns.

Top 10 Mutual Funds That Fell the Most in 6 Months of 2025

The following schemes recorded the sharpest declines between March 2025 and August 2025, with returns falling between –18% and –9%.

Rank	Mutual Fund Scheme	6-Month Return (%)
1	Axis Nifty IT Index Fund – Direct Plan	-18.37
2	Bandhan Nifty IT Index Fund – Direct Plan	-18.36
3	Nippon India Nifty IT Index Fund – Direct Plan	-18.26
4	ICICI Prudential Nifty IT Index Fund – Direct Plan	-18.24
5	Navi Nifty IT Index Fund – Direct Plan	-18.21
6	Tata Digital India Fund – Direct Plan	-11.89
7	Shriram Multi Sector Rotation Fund – Direct Plan	-11.34
8	Motilal Oswal Nifty MidSmall IT & Telecom Index Fund – Direct Plan	-10.86
9	ICICI Prudential Technology Fund – Direct Plan	-9.09
10	Aditya Birla Sun Life Digital India Fund – Direct Plan	-8.79

Why These Funds Crashed

1. Sector Concentration

Most of these funds are focused on technology and digital themes. When the IT sector faces headwinds, such schemes take a direct hit since they lack diversification.

2. Global IT Slowdown

A slowdown in global enterprise spending on IT services and software impacted the revenue outlook of major companies. This, in turn, weighed down IT-heavy indices and mutual funds tracking them.

3. Valuation Corrections

After enjoying strong returns in 2023 and early 2024, many technology stocks became expensive. Profit booking and valuation re-rating triggered sharp corrections in 2025.

4. Currency and Interest Rates

Fluctuations in USD/INR and higher global interest rates hurt IT earnings visibility, as a large portion of revenue comes from international clients.

5. Political and Trade Uncertainty

Global factors such as the Trump Tariff war and trade tensions added pressure on IT and digital stocks, accelerating the correction.

Fund-by-Fund Insights

Axis Nifty IT Index Fund – Direct Plan

This fund mirrors the Nifty IT Index and recorded the steepest fall of –18.37%. It is suitable only for investors with strong conviction in India’s IT sector and a long-term view.

Bandhan Nifty IT Index Fund – Direct Plan

Falling almost in line with Axis, this fund lost –18.36%. It highlights the sector-wide weakness rather than fund-specific mismanagement.

Nippon India Nifty IT Index Fund – Direct Plan

Dropping –18.26%, the Nippon India fund shows how passive IT exposure has struggled. Investors should be cautious before adding more.

ICICI Prudential Nifty IT Index Fund – Direct Plan

With a –18.24% fall, this fund shows that even established AMCs could not shield against a sectoral slump.

Navi Nifty IT Index Fund – Direct Plan

At –18.21%, the Navi IT fund mirrors the index closely. For long-term believers in digital transformation, this may be an opportunity, but risks remain high.

Tata Digital India Fund – Direct Plan

Unlike pure IT index funds, this scheme invests across digital themes. It fell –11.89% in six months but still has delivered strong 5-year returns of over 23% annually.

Shriram Multi Sector Rotation Fund – Direct Plan

This fund is designed to tactically shift across sectors but dropped –11.34% due to mistimed exposure. Execution risk is a major factor here.

Motilal Oswal Nifty MidSmall IT & Telecom Index Fund – Direct Plan

Falling –10.86%, this fund highlights how mid- and small-cap IT/telecom stocks are even more volatile than large-caps.

ICICI Prudential Technology Fund – Direct Plan

This actively managed fund declined –9.09% in six months. However, over the last decade, it has delivered an impressive 17% CAGR, showing resilience in the long run.

Aditya Birla Sun Life Digital India Fund – Direct Plan

With a fall of –8.79%, this fund is among the lesser losers in the group. Its multi-cap approach offers some cushion, but risks remain tied to the digital theme.

What Should Investors Do Now?

1. Review Your Horizon – If you are invested for more than five years and believe in the long-term IT/digital growth story, holding or averaging may be wise.
2. Avoid Over-Concentration – Sector funds should not dominate your portfolio. Keep exposure limited to 5–10%.
3. Diversify – Balance thematic exposure with diversified equity, hybrid, or index funds.
4. Use Dips Selectively – New investors can enter gradually in fundamentally strong funds during corrections.
5. Compare with Benchmarks – If your fund is underperforming peers and the benchmark consistently, consider switching.

Conclusion

The last six months have been tough for technology and digital-themed mutual funds. Most sectoral IT index funds dropped by nearly 18%, while actively managed schemes also slipped between 9–12%. These short-term crashes can feel discouraging, but they are part of market cycles. For disciplined, long-term investors who believe in the digital growth story, these corrections may even present opportunities. However, over-exposure to one theme should be avoided. The best approach is to diversify across sectors, align investments with your financial goals, and stay invested with patience.