March 2025 Mutual Fund Report: Large Cap Shines, Small Cap Falters

March 2025 turned out to be a strong month for several equity mutual fund categories, especially Large Cap and mid cap funds. According to PL Wealth Management, nearly 72% of Large Cap schemes outperformed the Nifty 50 TRI — showcasing stability amid Market movements. Overall, 114 out of 298 Equity Mutual Funds beat their benchmarks, signalling selective strength in the market.

With equity mutual fund AUM jumping by 7.68% in just one month — from ₹23.12 lakh crore in February to ₹24.90 lakh crore in March — investor confidence appears to be growing steadily.

Let’s take a closer look at the best and worst performing mutual fund categories this month.

Mutual Fund Category Performance in March 2025

Here's a complete performance breakdown by category:

Best Performing Mutual Fund Categories

Large Cap Funds stood out with nearly 72% of schemes outperforming the NIFTY 50 TRI, making them the most consistent performer of March. These funds typically invest in well-established companies and are considered a safer bet during market Volatility.

Large & Mid Cap Funds followed with a solid 58.06% outperformance rate, while Mid Cap Funds also showed strength with over 51% beating their benchmark.

Lowest Performing Category: Small Cap Funds

The real underperformer in March was the Small Cap Funds category, where only 3 out of 30 schemes (just 10%) outperformed the Nifty Smallcap 250 TRI. This sharp fall comes after a strong performance in previous months, showing how sensitive small-cap stocks can be to market corrections and valuation pressures.

AUM Growth: Investors Still Showing Confidence

Even as fund performance slipped, investors continued to trust Mutual Funds. The AUM of equity mutual funds grew 7.68% in just one month. This indicates that investors were either buying the dip or continuing their SIPs (Systematic Investment plan) regardless of short-term underperformance.

Key AUM stats:

• February 2025 AUM: ₹23.12 lakh crore

• March 2025 AUM: ₹24.90 lakh crore

How Did March Compare with Previous Months?

Let’s look at how March fared against earlier months in 2025:

• January 2025: Only 26.12% of equity MFs outperformed their benchmarks. Surprisingly, Small Cap Funds were leaders then, with over 86% of schemes beating benchmarks.

• February 2025: Performance improved sharply, with 54.08% of funds outperforming — led again by Small Cap Funds (79.31%).

• March 2025: Performance dipped to 38.64%, with Large Cap Funds now taking the lead.

This quick reversal shows why diversification across mutual fund categories is crucial for long-term investors.

Why Did Outperformance Fall in March?

Several factors played a role:

• Market volatility: Broader indices like NIFTY and Sensex were swinging due to global cues, including US Fed policies and crude oil volatility.

• Profit booking: After two strong months, many investors booked profits, especially in the small-cap segment.

• Valuation concerns: High valuations in small and mid caps led to cautious sentiment from institutional investors.

🧐 What Should Investors Do Now?

If you’re invested or planning to invest in Mutual Funds:

• Don’t chase past performance. Small Cap Funds did well earlier but faltered in March.
• Large Cap and Large & Mid Cap Funds offer stability in uncertain markets.
• Continue SIPs: Volatility actually benefits SIP investors through rupee cost averaging.
• Focus on long-term goals, not monthly performance blips.

Conclusion

March 2025 was a reality check for equity mutual fund investors. With only 39% of mutual funds outperforming benchmarks, the month showed how performance leadership can rotate quickly between categories.

Still, the Underlying message is clear: mutual fund investments remain a powerful tool for wealth creation, but they require patience, strategy, and consistent Investing.

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Frequently Asked Questions (FAQs)

1. What does it mean when a mutual fund outperforms its benchmark?

A: It means the mutual fund has delivered higher returns than the index it's benchmarked against during a specific period. For example, if a Large Cap Fund outperforms the NIFTY 50 TRI, it means the fund has done better than the NIFTY 50 Total Returns Index.

2. Why do some mutual fund categories underperform?

A: Underperformance can happen due to several reasons like market volatility, overexposure to specific sectors, macroeconomic factors, or fund manager strategy. Small Cap Funds, for instance, are more sensitive to market movements and showed only 10% outperformance in March 2025.

3. Should I switch my fund if it's underperforming in a single month?

A: Not immediately. Mutual fund performance should be evaluated over a longer horizon — such as 3 to 5 years. Short-term underperformance can be temporary and doesn’t necessarily reflect poor long-term prospects.

4. Which mutual fund category performed the best in March 2025?

A: Large Cap Funds were the top performers in March 2025, with 71.88% of schemes outperforming the NIFTY 50 TRI benchmark. Large & Mid Cap and Mid Cap Funds also showed healthy outperformance.

5. How is mutual fund AUM growing in India?

A: As of March 2025, the AUM (Assets Under Management) of equity mutual funds (excluding sectoral and thematic funds) grew by 7.68% to ₹24.90 lakh crore, up from ₹23.12 lakh crore in February 2025 — highlighting robust investor confidence.