Top 10 Mutual Funds That Crashed Between 7% and 15% in the Last 3 Months of 2025

In the last three months, sectoral and thematic mutual funds, particularly those focused on defence, PSU, and real estate, have seen significant declines. This article lists the top 10 mutual funds that have fallen between 7% and 15%, analyzing their performance and providing guidance for investors.

Mutual FundsSectoral FundsThematic FundsMarket VolatilityReal EstateReal EstateSep 02, 2025

Top 10 Mutual Funds That Crashed Between 7% and 15% in the Last 3 Months of 2025

Real Estate: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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Frequently Asked Questions

What are the main reasons for the decline in mutual funds in the last 3-6 months?

The main reasons include the Trump Tariff War impact, sector rotation, overheated valuations, rising bond yields, slower domestic demand, and global macro uncertainty.

Which sectors have seen the most significant declines in mutual funds?

The defence, PSU, and real estate sectors have seen the most significant declines in mutual funds.

What should investors consider before investing in sectoral or thematic mutual funds?

Investors should consider their investment objectives, risk tolerance, and the potential for high risks and rewards associated with these funds.

How can investors mitigate the risks associated with sectoral and thematic mutual funds?

Investors can mitigate risks by diversifying their portfolio, staying informed about market trends, and maintaining a long-term investment perspective.

What is the impact of government policies on sectoral mutual funds?

Government policies, such as defence spending and regulatory changes, can significantly impact the performance of sectoral mutual funds, especially those focused on defence and PSU sectors.