Growth funds take a breather

Summary: Growth funds powered portfolios for two straight years. 2025 is telling a different story. This update breaks down the sharp drop in outperformance, shifting investor flows and why flexi caps and large & mid caps still dominate equity allocations. The growth category — comprising flexi-cap, large & mid-cap, multi-cap, and value-oriented funds — continues to anchor most equity portfolios. These funds provide broad-based exposure to India’s top 500 companies and capture India’s evolving growth story. Unlike thematic funds that can chase specific investment themes, growth funds are built for consistency. They offer stability through large caps and a higher return potential from mid and small caps across sectors and themes. In short, these four fund categories are a reliable route for long-only investors seeking steady wealth creation. Key trends Performance: After two stellar years, growth funds have hit a consolidation phase in 2025. Market leadership has narrowed to a handful of outperforme

This article was originally published on November 20, 2025.