Yes, in general, mutual funds do not offer any capital protection, especially equity and hybrid mutual funds, which carry a higher level of market risk. This is because these funds invest in the stock market, which is inherently volatile. As a result, there is a possibility that the value of your investment may fall below the amount initially invested, particularly in the short to medium term. However, in the long term (typically 6–7 years or more), historical data shows that diversified mutual funds, such as large cap funds, flexi-cap funds, multi-cap funds, or hybrid funds, have rarely delivered negative returns. Long-term investing tends to smooth out market fluctuations and can help investors to benefit from the growth potential of equity market.