International funds have led the pack in 2025, with top performers delivering over 40% returns. Equity mutual funds have seen significant gains, with international schemes outperforming domestic ones. Factors like AI spending and commodity price rallies contributed to this trend. Investors are now looking towards 2026 with cautious optimism regarding these international investments.

Mutual funds sharply reduced cash holdings by over Rs 7,000 crore in November as Nifty scaled record highs, deploying more into equities. Cash levels fell to Rs 2.01 lakh crore, or 4.68% of AUM, with equity AUM rising significantly. A few fund houses, led by PPFAS, still maintain high cash buffers.

Mutual funds were net buyers of equities worth Rs 43,400 crore in November, with strong additions in stocks like Eternal, Groww and ICICI Bank. Buying interest spanned large-, mid- and small-cap segments, while stocks such as SBI, Reliance and Kaynes Technology saw notable reductions, according to Nuvama data.

Many equity mutual funds experienced significant losses in 2025. Over a dozen funds saw declines exceeding 10%. This performance shift highlights the need for strategic investment decisions. Investors are now considering where to focus their capital in the upcoming year. Experts suggest a move towards quality large-cap funds and diversified options for better outcomes.

Auto and Banking & Financial Services equity mutual funds have surged past 10% returns in 2025, leading the pack. While most categories saw positive gains, Smallcap and Pharma & Health Care funds experienced declines. Experts attribute the strong performance to robust demand, policy support and improving financial sector fundamentals.

Gold ETF inflows nearly halved in November, marking a second consecutive month of decline. Experts suggest this reflects normal profit-taking and portfolio adjustments rather than a loss of confidence in gold. Investors are advised to base gold investment decisions on asset allocation and gold prices, not just inflow patterns.

Sectoral and thematic mutual funds experienced a significant 37% surge in monthly inflows during November. This rise is attributed to investors chasing recent strong performance and new fund launches. Experts suggest this trend is more tactical and driven by FOMO rather than a permanent shift.