Top 10 Mutual Funds That Crashed Between 7% and 15% in the Last 3 Months of 2025
Mutual funds provide investors with an accessible way to diversify across asset classes and sectors with professional fund management. However, sectoral and thematic funds can face sharp corrections during volatile market cycles. In the last three months, funds focused on defence, PSU, and real estate themes have been some of the biggest losers, falling between 7% and 15%. This article lists these schemes, analyses their performance, and provides guidance on who should consider investing in them and what risks to watch for.
Earlier, we wrote about 10 Mutual Funds that Crashed the most in the last 6 months in 2025, which contained a mix of IT, Technology, Telecom, and mid-small IT companies. However, the funds discussed here are majorly from Real Estate, Defence, and PSU sectors.
### Why Mutual Funds are Falling in the Last 3-6 Months?
Here are the key reasons:
- **Trump Tariff War Impact:** Global equity markets saw heightened volatility due to new US tariffs announced by the Trump administration, triggering risk-off sentiment and profit booking in emerging markets like India. - **Sector Rotation:** Investors moved away from high-growth thematic sectors like defence and real estate to safer or undervalued sectors, causing sharp declines in these niche funds. - **Overheated Valuations:** Many defence, PSU, and realty stocks had rallied significantly in previous quarters; stretched valuations led to steep corrections when earnings growth didn’t match expectations. - **Rising Bond Yields:** Higher global and domestic bond yields prompted FIIs to book profits in equities, pressuring mutual fund NAVs. - **Slower Domestic Demand:** Realty and PSU themes underperformed due to muted demand outlook, delayed projects, and regulatory hurdles. - **Global Macro Uncertainty:** Uncertainty around interest rate trajectories, geopolitical tensions, and currency fluctuations intensified selling pressure, especially in thematic funds with concentrated exposure.
### Top 10 Mutual Funds That Fell Between 7% and 15% in the Last 3 Months
We have considered all equity mutual funds, including thematic mutual funds, sector funds, and global funds that have fallen the most in the last 3 months. Data is as of 31-Aug-2025 and sourced from ValueResearch and Moneycontrol.
| Fund Name | 3-Month Return (%) | | --- | --- | | Groww Nifty India Defence ETF FoF | -14.91 | | Aditya Birla Sun Life Nifty India Defence Index Fund | -14.67 | | Motilal Oswal Nifty India Defence Index Fund | -14.65 | | Groww Nifty India Railways PSU Index Fund | -13.79 | | HDFC Defence Fund | -8.90 | | Tata Nifty Realty Index Fund | -8.43 | | Nippon India Nifty Realty Index Fund | -8.21 | | HDFC NIFTY Realty Index Fund | -8.10 | | Quant PSU Fund | -7.82 | | Quant Teck Fund | -7.36 |
### Deep Dive into These Top 10 Mutual Funds That Fell Between 7% and 15% in the Last 3 Months
Many of these mutual funds have been launched in the last few months to a few years, and we do not have performance history in the last 3 or 5 years, hence we have given “N/A” to indicate not applicable.
#### #1 – Groww Nifty India Defence ETF FoF
**Investment Objective:** To seek to generate returns by investing predominantly in units of the Groww Nifty India Defence ETF, which aims to track the Nifty India Defence Index, subject to tracking error and expenses.
- **3-Month Return:** -14.91% - **Annualised Returns:** - 1 Year: N/A - 3 Years: N/A - 5 Years: N/A - **Who Can Invest:** - Investors bullish on India’s long-term defence sector growth. - Suitable for aggressive investors with a long-term horizon. - **Risk Factors:** - Sector concentration risk. - Sensitive to government policies, defence spending, and geopolitical events.
#### #2 – Aditya Birla Sun Life Nifty India Defence Index Fund
**Investment Objective:** To provide returns that closely correspond to the total returns of the Nifty India Defence Index (TRI), subject to tracking error.
- **3-Month Return:** -14.67% - **Annualised Returns:** - 1 Year: N/A - 3 Years: N/A - 5 Years: N/A - **Who Can Invest:** - Passive investors seeking pure defence sector exposure. - Suitable for those with high-risk tolerance. - **Risk Factors:** - Defence sector volatility, regulatory changes. - Limited diversification.
#### #3 – Motilal Oswal Nifty India Defence Index Fund
**Investment Objective:** To replicate/track the Nifty India Defence Index (TRI) and deliver index-like returns before expenses and tracking error.
- **3-Month Return:** -14.65% - **Annualised Returns:** - 1 Year: 7.03% - 3 Years: N/A - 5 Years: N/A - **Who Can Invest:** - Long-term investors looking for passive exposure to a growing defence theme. - **Risk Factors:** - Index concentration risk. - Sensitive to order inflows and government defence budgets.
#### #4 – Groww Nifty India Railways PSU Index Fund
**Investment Objective:** To generate returns that closely correspond to the Nifty India Railways PSU Index (TRI) by investing in its constituent securities, subject to tracking error.
- **3-Month Return:** -13.79% - **Annualised Returns:** - 1 Year: N/A - 3 Years: N/A - 5 Years: N/A - **Who Can Invest:** - Investors looking for exposure to the Indian railways and PSU sector. - **Risk Factors:** - Sector concentration risk. - Sensitive to government policies and project delays.
### What Should Investors Do Now?
Given the recent declines, investors should:
- **Reassess Portfolio:** Review their portfolio to ensure it aligns with their risk tolerance and investment goals. - **Diversify:** Consider diversifying across sectors to mitigate sector-specific risks. - **Stay Informed:** Stay updated on market trends and economic indicators that could impact the performance of these funds. - **Long-Term Perspective:** Maintain a long-term perspective and avoid making impulsive decisions based on short-term market movements.
### Conclusion
The recent declines in sectoral and thematic mutual funds highlight the importance of diversification and a long-term investment approach. While these funds offer the potential for high returns, they come with significant risks. Investors should carefully consider their investment objectives and risk tolerance before investing in these funds.
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