The Indian mutual fund industry has witnessed a remarkable transformation over the past decade, with assets under management (AUM) rising more than sevenfold to Rs 74.4 lakh crore as of June 2025, according to a study by Motilal Oswal Mutual Fund.
Equity funds continue to dominate the industry, accounting for 59.94 per cent of the total AUM, followed by debt at 26.53 per cent, hybrid funds at 8.28 per cent, and other categories at 5.26 per cent. One of the most significant shifts has been the growing preference for passive investment strategies, which now represent around 17 per cent of the industry’s total AUM.
Debt Funds Lead Quarterly Inflows
In the April-June quarter of FY26, mutual funds saw estimated net inflows of Rs 3.98 lakh crore. Debt funds contributed the most with Rs 2.39 lakh crore, reversing outflows from the previous quarter. Equity funds followed with Rs 1.33 lakh crore in net inflows, while commodity funds brought in Rs 9,000 crore.
Active strategies contributed Rs 3.62 lakh crore to the total inflows, while passive funds accounted for Rs 36,000 crore.
Broad-based equity funds led inflows within the equity segment, attracting Rs 86,000 crore, which made up 64 per cent of total equity flows. Of this, active funds brought in 55 per cent while passive funds accounted for an impressive 106 per cent, indicating growing investor interest in benchmark-aligned portfolios.
In active broad-based funds, Flexi Cap funds led with Rs 15,800 crore in inflows, followed by Small Cap (Rs 12,000 crore) and Mid Cap (Rs 10,800 crore). Among passive funds, Large Cap funds remained the most favoured, reflecting continued allocation to blue-chip companies.
Thematic Funds Face Net Outflows, Debt Regain Momentum
Thematic mutual funds saw net outflows of Rs 2,400 crore during the quarter, compared to Rs 8,400 crore of inflows in the previous one. However, select themes such as Technology and Business Cycle attracted Rs 1,400 crore combined, while Defence-themed funds alone brought in Rs 1,800 crore, showing investor focus on macro-linked sectors.
Constant maturity strategies drove the resurgence in debt funds, accounting for Rs 2.04 lakh crore in net inflows. Corporate bond funds followed, supported by increased institutional participation amid changing interest rate expectations.
In the hybrid category, multi-asset funds made up 57 per cent of total inflows. Balanced Advantage Funds attracted Rs 4,200 crore, while Equity Savings Funds brought in Rs 1,400 crore, signalling sustained interest in balanced and risk-mitigated approaches.
The industry launched 46 new fund offers (NFOs) during the quarter, mobilising a total of Rs 6,506 crore. Notably, five asset management companies were responsible for a major share of these inflows, indicating concentration in investor preference.
Pratik Oswal, Head, Passive Business, Motilal Oswal Asset Management Company, said the quarter showcased a visible shift in portfolio preferences, with investors increasingly leaning toward well-diversified and stable strategies.
“What’s particularly encouraging is the increasing traction seen in passive investing. Indian investors are gradually recognising the structural benefits of passive funds—simplicity, cost efficiency, and alignment with market benchmarks,” Oswal said.
He added that while active funds continue to perform strongly, especially in mid- and small-cap categories, passive funds are now becoming a key part of long-term portfolios. “The conversation is no longer just about chasing alpha, but about achieving portfolio stability in an ever-changing economic environment.”