Passive mutual funds grow 11% in a year; folios expand 17x in 5 years: Franklin Templeton MF

Passive investing is carving out a larger space in India’s mutual fund industry. According to Franklin Templeton India Mutual Fund, passive fund assets under management (AUM) touched ₹12.19 lakh crore in August 2025, up from ₹10.96 lakh crore a year earlier — an 11% year-on-year increase.

The share of passive AUM in the overall industry has steadily expanded, rising from 11% in August 2021 to 16% in August 2025.

Investor participation has also surged, with passive fund folios multiplying 17 times in the past five years.

Equity flows and investor growth

The rise in passive funds comes alongside continued strength in equity inflows. Equity-oriented schemes have recorded positive net sales for 54 straight months, with inflows of ₹42,665 crore in August 2025.

Investor participation has reached a new milestone, with the total investor count climbing to 5.64 crore in August, as nearly 4.9 lakh new investors joined during the month. Over the past year, the industry added 73 lakh investors.

SIP momentum

Systematic Investment Plans (SIPs) remain a backbone of retail participation. The average SIP ticket size rose to ₹2,947 in August 2025, up from ₹2,564 in December 2024, while monthly SIP flows touched ₹28,265 crore, nearly doubling in under three years.

Domestic flows dominate

Mutual funds have also consolidated their role as the dominant domestic force. Inflows from domestic institutional investors (DIIs) totaled ₹7.3 lakh crore in the 12 months to August 2025, compared with net outflows of ₹3.8 lakh crore from foreign portfolio investors (FPIs).

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