Widely read:
Ujjal Das/AI-Generated Image
On January 1 this year, the average flexi-cap fund had a certain NAV. Seven months later, it is back at the same place. The category's return for 2026 so far is 0.6 per cent. Large-cap funds are down 2.6 per cent. ELSS is down 0.9.
So nothing happened this year? Hardly.
February was the worst month technology funds have had in years, down 16.7 per cent as AI shares fell around the world. In March the selling reached everything else. Large-cap funds lost 11.6 per cent that month, mid-caps 10.7, small-caps 9.7, and the newspapers were full of explanations for why this was only the beginning. Then April arrived and undid all of it. Small-cap funds gained 16.1 per cent in a single month, mid-caps 12.8, large-caps 9.3. If you had gone travelling in February with no phone and no newspaper, you would have returned in May to find your portfolio roughly where you left it.
We wrote about this in April, in a column called Nothing ever happens. It described a bot on Polymarket, the prediction market, that bets 'No' on every question, because most of the things people fear never actually occur. The bot would have enjoyed this half-year. The investor who did nothing lost nothing. The investor who sold in March turned a temporary fall into a permanent one, and then watched April from the sidelines.
Last year's winners, this year's losers
| Category | 2025 | 2026 so far |
|---|---|---|
| Commodities: Silver | 158.10% | -5.00% |
| Commodities: Gold | 73.80% | 6.30% |
| Equity: International | 30.20% | 15.20% |
| Equity: Sectoral-Banking | 18.90% | -2.00% |
| Equity: Sectoral-Pharma | -2.90% | 16.40% |
| Equity: Small Cap | -5.50% | 9.70% |
| Equity: Sectoral-Technology | -7.40% | -13.20% |
Look at the top of that table. Silver funds gave 158 per cent in 2025, and by December every financial conversation seemed to end at silver. Anyone who acted on those conversations and bought in January or later is sitting on a loss today. Anyone who came in after January's 40 per cent monthly jump is down by roughly a third.
Gold went from 74 per cent to 6. Banking funds, the consensus favourite a year ago, have gone nowhere. And pharma and small caps, the two categories most people had written off in 2025, now lead the domestic table.
International funds are the exception. They led the equity table in 2025 and lead it again this year. Two good years in a row do happen. Of the seven categories in our table, six flipped.
The July trap
Technology funds fell 22 per cent between February and June. In July they recovered 13.9 per cent, and because that bounce made them the month's best performers, the league tables and the headlines are once again full of technology funds. Some are asking whether you should ride the rally.
Step back a little. The category is down 13.2 per cent this year. Down 7.8 per cent over one year. Its three-year return, 5.5 per cent a year, is less than what a liquid fund gave over the same period. July's gain covers less than a tenth of what the five months before it took away.
A league table tells you what you should have bought. It never tells you what to buy.
The boring money won
Liquid funds have earned 3.5 per cent so far this year. In fact, every debt category, from overnight funds to credit risk, has beaten large-cap funds over these seven months.
Should you move your equity money into liquid funds, then? No. Over 10 years, large-cap funds have compounded at 11.9 per cent a year and liquid funds at 6, and that gap is the reason anyone owns equity at all. The point is narrower. Seven months is a window small enough to produce any ranking it likes. This one put liquid funds above the Sensex heavyweights. The next one will put something equally odd on top.
A first report card for SIFs
The new long-short SIFs got their first real test in the March quarter. Their sales pitch is that the ability to bet against shares softens a fall. Equity long-short SIFs fell 8.2 per cent while flexi-cap funds fell 13.1, so there was some softening. Hybrid long-short fell 3.7. The Ex-Top 100 variety fell 13 per cent, which is no softening at all.
For comparison, an ordinary balanced hybrid fund fell 6.5 per cent in the same quarter, with lower costs and far less complexity. Three quarters of history proves nothing either way. On the evidence so far, though, we would not pay extra for the short book.
For a detailed report on SIFs, check out our cover story of Mutual Fund Insight August 2026 edition.
One thing to do
Check your asset allocation once. The fall and the recovery may have moved it away from your plan. If so, rebalance and be done. The league tables will announce a fresh set of winners in December. You already know what happens to them.
All figures are category averages from the Value Research Fund Monitor, as of July 31, 2026.
Ask Value Research 
New episodes every Friday 
New Process Alert 
Seems like you've uploaded a wrong QR code. Please upload the QR code downloaded from MF Central platform.
