Mutual fund NFO filings double in 2025 even as fund mop-up takes a hit

Amidst the ongoing market fluctuations, mutual fund houses have doubled their draft filings with the Securities and Exchange Board of India (SEBI) in 2025 till date. A total of 64 new fund offerings (NFOs) documents have been filed so far this year, reflecting a significant year-on-year (YoY) increase from 32 filings in 2024.

The surge has been led by a growing interest in index funds and exchange-traded funds (ETFs), with 21 index funds and 15 ETFs filed this year up from 9 and 6 in 2024.

Industry experts suggest that fund houses are capitalising on changing investor preferences amid volatility, as passive investment options like index funds and ETFs gain popularity. The increase in debt fund filings also suggests that fund managers are focusing on fixed-income products to provide stability during market uncertainty. This can be seen in the number of passive NFOs launched in these two months, up from 5 in January 2025 to 18 in February 2025.

Also read: Net inflow into equity funds hit year low in February, SIPs dip to three-month low

Meanwhile, some index fund filings include the SBI Nifty200 Quality 30 Index Fund, Axis Nifty500 Low Volatility 50 Index Fund, and Edelweiss BSE Internet Economy Index Fund. ETFs have also gained traction, with draft filings such as ICICI Prudential Nifty EV & New Age Automotive ETF FOF, Angel One Nifty Total Market ETF, and Kotak Nifty 200 Quality 30 ETF.

Debt fund filings continue to maintain strong momentum, with 11 filings in 2025, up from 8 in 2024. Filings in this category included Bandhan Fixed Maturity Plan – Series 214 (370 Days) and the Axis CRISIL-IBX AAA Bond Financial Services – Dec 2026 Index Fund.

Equity mutual funds have also seen a rise, with 13 new schemes being filed up from 7 in 2024. Some notable filings include Samco Large & Mid Cap Fund, Axis India Multi-Sector Growth Fund, and Motilal Oswal Active Momentum Fund.

In Hybrid funds, filings include UTI Income Plus Arbitrage Active Fund of Fund and Unifi Dynamic Asset Allocation Fund are among the few filings made in this category in 2025.

NFO collections drop

While the number of filings has increased, some concerns remain in terms of collection. Recently, Axis Mutual Fund decided to withdraw the NFO for the Axis Nifty 500 Momentum 50 Index Fund right before the NFO was to be launched. The fund house has not mentioned the reason for the same.

Till date around 66 NFOs (41 for the months of January and February) have been launched against 56 between January and March last year (42 till February 28). But while the number of funds has risen, the collections from these funds has declined. This has come on the back of a decline in mutual fund flows, especially in the equity space.

In February 2025,  flows into equity schemes remained positive but fell 26 percent month-on-month to Rs 29,303.34 crore. Debt funds also saw a decline as inflows fell from Rs 1.28 lakh crore in January 2025 to outflows of around Rs 6,526 crore in February 2025.

According to data from AMFI, total funds collected from NFOs between January and February is lower in 2025 at Rs 8,573 crore against Rs 18,537 crore in 2024. In March 2024, the total amount collected from NFOs was around Rs 4,146.

With a decline in flows into equity funds, experts see some challenges ahead for the mutual fund industry. According to a March 21 report by Incred Equities, inflows into mutual funds are expected to remain volatile in the near term. They, however, continue to see opportunities for growth among larger, older players rather than new players.

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