Summary of this article
Mutual fund AUM scaled fresh records despite volatile markets
Industry asset growth outpaced benchmark equity returns
Domestic flows showed resilience amid external uncertainties
2025 remained a roller coaster ride for Indian equities, with global trade tensions and geopolitical risks weighing on sentiment. Despite this, the mutual fund industry continued to reach new milestones. Mutual funds crossed assets under management (AUM) of Rs 70 lakh crore in April 2025, an all-time high at the time. The momentum stayed strong over the next quarter, with AUM rising 8 per cent to Rs 75 lakh crore by July. By the end of November 2025, industry AUM climbed even higher to around Rs 81 lakh crore, marking yet another record, according to data from the Association of Mutual Funds in India (Amfi).
Overall, the mutual fund industry’s assets expanded 21 per cent during the year till November, comfortably outpacing the Nifty 50’s 11 per cent gain over the same period, as shown in the ‘India Annual Outlook 2026’ Report by Franklin Templeton. The numbers underline the growing depth and resilience of domestic flows, even in a year marked by sharp market swings and external uncertainties.
SIP Flows at All-Time High in 2025
SIP inflows touched a record Rs 29,529 crore in October 2025, before easing marginally to Rs 29,445 crore in November. Total SIP flows for 2025 stood at Rs 3.03 lakh crore, up from Rs 2.47 lakh crore last year. November SIP inflows were 16 per cent higher year-on-year. Since end-2024, SIP flows have risen 11 per cent till November, broadly in line with the Nifty 50’s growth. Higher retail participation and greater awareness of SIPs supported steady inflows through the year. Strong SIP contributions also helped cushion equity markets against volatility caused by Foreign Portfolio Investor outflows.
Equity Funds Dominate NFOs in 2025
The aggregate new fund offers (NFO) flows in 2025 up to the end of November were Rs 63,631 crore, out of which equity funds comprised 61 per cent or Rs 38,633 crore.
Flexi Cap Funds Dominate Equity Inflows
Equity flows were slightly impacted by market volatility, with net inflows of Rs 3.22 lakh crore till November 2025, down 18 per cent from Rs 3.94 lakh crore in 2024. Among categories, flexi cap funds led with Rs 70,960 crore, up 73 per cent from Rs 40,961 crore last year. Mid-cap funds saw Rs 45,763 crore, a 33 per cent rise, while small-cap funds recorded Rs 48,497 crore, up 42 per cent, as shown in the report. Sector and thematic funds moderated sharply to Rs 37,199 crore from Rs 1,55,743 crore in 2024. Overall, flows favoured diversified and mid/small-cap segments despite broader market uncertainty.
Shorter Duration Funds Dominate Debt Inflows
Shorter-duration debt funds saw strong inflows in 2025. As per data from the report, money market funds led with Rs 1,07,458 crore, up 51 per cent from Rs 71,311 crore in 2024. Low-duration funds received Rs 33,585 crore, ultra short-duration Rs 31,117 crore, and short-duration funds jumped fivefold to Rs 19,413 crore from Rs 3,764 crore last year. In contrast, longer-duration and specialised debt funds, including gilt funds, banking & PSU debt, floater, credit risk, long-duration, dynamic, medium/medium-to-long duration, and 10-year gilt funds saw net outflows. Overall, flows favoured shorter-maturity instruments amid market caution, while longer-duration categories faced pressure, as shown in the data from the report.
Arbitrage Funds Dominated Hybrid Fund Inflows
Among hybrid fund categories, arbitrage funds saw the strongest inflows. They garnered net inflows of Rs 72,192 crore till November, up from Rs 67,589 crore during the same month in 2024. Multi-asset allocation funds collected Rs 39,631 crore, slightly lower than the Rs 42,569 crore they attracted last year. Balanced advantage funds lagged, with inflows falling 23 per cent to Rs 15,421 crore from Rs 19,965 crore in 2024, indicating a more cautious stance towards dynamically managed equity–debt strategies.
Investor Growth in 2025: Large Population, Low Penetration
The mutual fund industry added 58 lakh investors in 2025, lower than the over 1 crore added in 2024, taking the total investor base to 5.84 crore by November. With India’s population at over 140 crore, mutual fund penetration stands at just 4 per cent. In comparison, developed markets like the US had 37 per cent of the population invested in mutual funds by the end of 2024. The numbers highlight the significant scope for growth in India, driven by rising awareness, financial literacy, and expanding retail participation in equities and mutual fund products.
Mutual Fund AUM vs Bank Deposits
Over the past decade, the ratio of mutual fund AUM to bank deposits has nearly tripled, from 12.6 per cent in 2015 to over 33 per cent in 2025. While bank deposits grew around threefold, mutual fund AUM expanded over seven times. Factors like falling deposit rates, rising incomes, and aspirations of a young population have driven investors toward mutual funds for better returns. Despite this growth, India remains far behind developed markets like the US, where mutual fund AUM exceeds twice the size of bank deposits, highlighting the huge potential for further penetration and expansion of mutual fund investments in the country.
India’s Mutual Fund Industry: 2026 Outlook
As per the Franklin Templeton India Annual Outlook 2026 Report, the mutual fund industry has grown at a 20 per cent CAGR over the past decade, with over 5 crore investors in 2025 and 3 crore added in the last five years. AMFI projects that by 2047, industry AUM could expand nearly 35 times to Rs 2,791 lakh crore, with investor numbers exceeding 26 crore and AUM-to-GDP ratio reaching 112 per cent.
Digital adoption has transformed the industry, with 90 per cent of transactions now via online platforms, according to Amfi, says the report. Fintechs and smartphones have democratized access, attracting millennials, first-time investors, and B30 markets. Product innovation is another growth driver: SEBI’s 2025 launch of Specialised Investment Funds (SIFs) offers differentiated investment options with lower ticket sizes and greater flexibility than PMS or AIFs.
GIFT City is emerging as a hub for inbound and outbound funds, allowing global investors to access India and Indian investors to tap international markets.
The report highlights that rising per capita income, digital integration, and increasing awareness set the stage for accelerated growth. With a robust economy and an underpenetrated market, India’s mutual fund industry is poised for substantial expansion in the coming decade.
