10 Mutual Funds with the Biggest Losses in Last 1 Year (2025 Update)

Mutual funds have always been considered one of the most convenient ways to participate in equity and debt markets without directly picking individual stocks or bonds. With professional fund managers at the helm, investors expect relatively stable and diversified returns. However, mutual funds are not insulated from downturns, especially when the focus is on thematic or sector-specific segments. The last one year has been a mixed bag for Indian investors. While certain categories have delivered strong performance, others – particularly momentum, consumption, manufacturing, and PSU-focused funds – have seen steep corrections.

This article highlights the 10 mutual funds that crashed the most in the last one year in 2025, explains the reasons behind their underperformance, and provides a fund-wise breakdown to help investors understand the risks involved.

What Are Mutual Funds?

A mutual fund is essentially a pool of money collected from multiple investors with a common investment goal. The fund manager invests this pool across equity, debt, or a combination of asset classes in line with the scheme’s objective.

While diversified mutual funds spread risk by investing across sectors and market caps, thematic and sectoral funds are more concentrated. For instance, a manufacturing fund may only invest in industrial companies, while a PSU fund focuses on public sector firms. These concentrated bets can generate high returns during favorable conditions but also expose investors to sharper declines during downturns.

10 Mutual Funds That Fell the Most in the Last 1 Year

The following funds recorded the sharpest declines in the last one year, with losses ranging between 14% and 16%.

Fund Name	1-Year Return (%)	1 Lakh would have become (₹)
Quant PSU Fund	-16.05	83,950
Quant Manufacturing Fund	-15.65	84,350
Tata Nifty Realty Index Fund	-14.72	85,280
HDFC NIFTY Realty Index Fund	-14.10	85,900
ICICI Prudential Nifty 200 Momentum 30 Index Fund	-14.10	85,900
HDFC NIFTY200 Momentum 30 Index Fund	-14.09	85,910
Bandhan Nifty200 Momentum 30 Index Fund	-14.06	85,940
Motilal Oswal Nifty 200 Momentum 30 Index Fund	-13.93	86,070
Samco Flexi Cap Fund	-13.93	86,070
Quant Consumption Fund	-13.87	86,130

Fund-Wise Deep Dive

Quant PSU Fund

This scheme invests in public sector companies. In 2025, heavy exposure to PSU stocks hurt returns due to policy-related uncertainty and profit-booking after previous rallies.

Quant Manufacturing Fund

Focused on industrial and manufacturing companies, this fund suffered from global economic slowdown and higher raw material costs, leading to weak performance.

Tata Nifty Realty Index Fund

Tracking the Nifty Realty Index, this passive fund lost value as real estate stocks corrected amid interest rate pressures and regulatory challenges.

HDFC NIFTY Realty Index Fund

Similar to Tata’s offering, this index fund also mirrored the weakness in real estate stocks, reflecting the volatility of the sector.

ICICI Prudential Nifty 200 Momentum 30 Index Fund

Momentum strategies often thrive in strong market uptrends. However, when trends reverse, they fall sharply. The fund lost around 14% in one year but still shows healthy long-term numbers.

HDFC NIFTY200 Momentum 30 Index Fund

Another passive fund tracking the same momentum index, this too declined in line with reversals in high-growth stocks.

Bandhan Nifty200 Momentum 30 Index Fund

Like its peers, the Bandhan fund was hit by sudden momentum reversals, showing the inherent cyclicality of this strategy.

Motilal Oswal Nifty 200 Momentum 30 Index Fund

While the one-year return was negative, the fund has a decent long-term track record. Short-term underperformance highlights the volatility of momentum-driven investing.

Samco Flexi Cap Fund

This actively managed flexi-cap fund struggled with stock selection across market caps, leading to double-digit losses in the past year.

Quant Consumption Fund

Despite India’s strong consumption story, this fund corrected due to inflationary pressures, slowing demand, and high valuations in consumer companies.

Why These Funds Fell

Several factors contributed to the decline in these funds:

• Concentration Risk: Thematic funds like PSU, manufacturing, and consumption are more volatile due to narrow focus.
• Global and Domestic Challenges: High interest rates, global slowdown, and inflationary pressures hit cyclical sectors hard.
• Profit Booking: After strong multi-year rallies, investors booked profits, putting pressure on valuations.
• Volatility in Cyclical Sectors: Manufacturing and real estate are heavily linked to economic cycles, leading to sharper drawdowns.

What Should Investors Do?

While short-term underperformance is disappointing, it is important to view these corrections in the right perspective. Here are a few strategies for investors:

• Stay Long-Term Oriented: If your horizon is more than 5 years, short-term falls may offer buying opportunities.
• Avoid Over-Concentration: Do not allocate heavily to one sector or theme, no matter how attractive it looks during rallies.
• Compare Peer Funds: Check if the underperformance is across the entire theme or limited to one scheme.
• Use Corrections Wisely: For aggressive investors, dips in fundamentally strong sectors can be an entry point.

Conclusion

The last one year has been challenging for certain categories of mutual funds, especially those focused on momentum, PSU, consumption, and real estate themes. These funds lost between 14% and 16%, reminding investors of the inherent risks in concentrated strategies. However, such downturns are part of market cycles. For disciplined investors with a diversified portfolio and long-term goals, these corrections can create opportunities rather than setbacks.

The key is to align investments with your financial goals, risk appetite, and time horizon. Mutual funds remain one of the best vehicles for wealth creation, but careful selection and patience are crucial to navigating volatile phases.