India's mutual fund industry explodes seven times in 10 years-What investors are buying now

India’s mutual fund industry has witnessed a dramatic transformation, with assets under management (AUM) surging to Rs. 74,40,000 crore (US$ 848 billion) as of June 2025, a sevenfold growth over the past decade, as per Motilal Oswal Mutual Fund. Equity funds still dominate with a 59.94% share, but debt funds have made a striking comeback, contributing 26.53% to the AUM. In Q1 FY26 alone, debt mutual funds witnessed net inflows of Rs. 2,39,000 crore (US$ 27 billion), largely from institutional investors favouring constant maturity and corporate bond strategies. Hybrid funds continued to attract moderate demand, led by multi-asset allocation products. Notably, the quarter saw 46 new fund offers (NFOs) raising Rs. 6,506 crore (US$ 742 million), largely driven by top asset management companies (AMCs).
Passive investing is fast becoming a structural trend in India’s mutual fund space, accounting for 17% of total AUM. Passive funds recorded net inflows of Rs. 36,000 crore (US$ 4.11 billion) in Q2 FY25, highlighting their growing appeal due to simplicity, cost-efficiency, and market alignment. Within equity, active broad-based funds dominated inflows, with flexi cap Rs. 15,800 crore (US$ 1.80 billion), small cap Rs. 12,300 crore (US$ 1.40 billion), and mid cap Rs. 10,800 crore (US$ 1.23 billion) leading the charge. Thematic funds, on the other hand, experienced Rs. 2,400 crore (US$ 274 million) in outflows. However, niche segments like defence and technology still attracted investor interest. The shift signals a maturing investor base, with increasing focus on balanced, long-term strategies across active and passive categories.

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.