Mutual fund investors often chase top performers, but very few track consistent underperformers. Identifying such laggards is equally important—especially when market trends change sharply. In the last 6 months (Nov-25 to Apr-26), one sector has clearly disappointed investors—Information Technology (IT). With global tech slowdown concerns, recession fears in the US, and weak earnings outlook, IT-focused mutual funds have seen sharp corrections. In this article, I will highlight 10 worst performing mutual funds in the last 6 months (as of 30-Apr-2026) and what investors should do now.
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Why IT Mutual Funds Fell Sharply in the Last 6 Months?
Before jumping into the list, let’s understand the key reasons behind this sharp fall:
- Weak global demand for IT services
- Slowdown in US economy impacting Indian IT exports
- Margin pressure due to rising employee costs
- Reduced deal wins and delayed client spending
- Overvaluation correction after strong rally in previous years
These factors have led to consistent negative returns across most IT-focused mutual funds.
List of Worst Mutual Funds Based on Last 6 Months Returns (as of 30-Apr-2026)
Here is a quick snapshot of the worst performing mutual funds based on 6-month returns:
| Mutual Fund | 6 Months Return (%) |
|---|---|
| HDFC Technology Fund – Direct Plan | -19.88% |
| Motilal Oswal Digital India Fund – Direct Plan | -18.79% |
| Bandhan Nifty IT Index Fund – Direct Plan | -18.55% |
| SBI Nifty IT Index Fund – Direct Plan | -18.46% |
| Axis Nifty IT Index Fund – Direct Plan | -18.45% |
| ICICI Prudential Nifty IT Index Fund – Direct Plan | -18.45% |
| Nippon India Nifty IT Index Fund – Direct Plan | -18.44% |
| DSP Nifty IT Index Fund – Direct Plan | -18.41% |
| Navi Nifty IT Index Fund – Direct Plan | -18.40% |
| Tata Nifty India Tourism Index Fund – Direct Plan | -18.16% |
10 Worst Mutual Funds in the Last 6 Months (May 2026)
Below are the worst performing mutual funds based on 6-month returns.
1) HDFC Technology Fund – Direct Plan
- 3 Months Return: -18.99%
- 6 Months Return: -19.88%
- 1 Year Return: -14.10%
This fund tops the list with the steepest fall in the last 6 months. Being an actively managed sector fund, it is highly dependent on IT sector performance.
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2) Motilal Oswal Digital India Fund – Direct Plan
- 3 Months Return: -12.05%
- 6 Months Return: -18.79%
- 1 Year Return: -4.78%
Focused on digital and technology themes, this fund has also taken a hit due to valuation corrections.
3) Bandhan Nifty IT Index Fund – Direct Plan
- 3 Months Return: -23.83%
- 6 Months Return: -18.55%
- 1 Year Return: -16.95%
4) SBI Nifty IT Index Fund – Direct Plan
- 3 Months Return: -23.76%
- 6 Months Return: -18.46%
- 1 Year Return: -16.89%
5) Axis Nifty IT Index Fund – Direct Plan
- 3 Months Return: -23.77%
- 6 Months Return: -18.45%
- 1 Year Return: -16.82%
6) ICICI Prudential Nifty IT Index Fund – Direct Plan
- 3 Months Return: -23.75%
- 6 Months Return: -18.45%
- 1 Year Return: -16.85%
- 3 Year Return: 3.6%
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7) Nippon India Nifty IT Index Fund – Direct Plan
- 3 Months Return: -23.73%
- 6 Months Return: -18.44%
- 1 Year Return: -16.77%
8) DSP Nifty IT Index Fund – Direct Plan
- 3 Months Return: -23.72%
- 6 Months Return: -18.41%
9) Navi Nifty IT Index Fund – Direct Plan
- 3 Months Return: -23.64%
- 6 Months Return: -18.40%
- 1 Year Return: -16.82%
10) Tata Nifty India Tourism Index Fund – Direct Plan
- 3 Months Return: -2.99%
- 6 Months Return: -18.16%
- 1 Year Return: -18.46%
This is the only non-IT fund in the list, indicating that tourism stocks also faced pressure in recent months.
Key Observations from the Data
- 8 out of 10 funds are IT/ Tech-focused funds
- Most funds delivered -18% to -20% returns in just 6 months
- Index funds and active funds both performed poorly
- Short-term volatility is extremely high in sectoral funds
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Should You Exit These Mutual Funds Now?
This is where most investors make mistakes.
1) Don’t panic sell
Sector funds are cyclical. What is underperforming today may outperform tomorrow.
2) Review your investment objective
If you invested for long-term growth (5–7 years), short-term correction is normal.
3) Avoid fresh lump sum investments now
If the sector continues to remain weak, further downside is possible.
4) SIP investors can continue
SIPs help average costs during market corrections.
5) Limit exposure to sector funds
Ideally, sector funds should not exceed 10–15% of your overall portfolio.
Who Should Avoid These Funds?
- Conservative investors
- Short-term investors (less than 3 years)
- Investors with low risk tolerance
These funds are suitable only for high-risk investors with long-term horizon.
Final Thoughts
The last 6 months clearly highlight one lesson—sectoral concentration can be risky.
While IT mutual funds have corrected sharply, it doesn’t mean they are bad investments forever. However, investors should:
- Diversify across sectors
- Avoid overexposure to thematic funds
- Stay invested with long-term discipline
Instead of chasing returns, focus on asset allocation and risk management.
Disclaimer
This article is for educational purposes only and should not be considered as investment advice. Mutual fund investments are subject to market risks. Please consult your financial advisor before making investment decisions.
