Mutual Funds

The mutual fund industry added Rs 8 lakh crore to its asset base in FY26, marking the slowest rise in three years amid continued volatility in Indian equity markets. Assets under management of the mutual fund industry rose 12.2 percent, or Rs 8 lakh crore, to Rs 73.73 lakh crore in FY26, data from the AMFI showed. This was sharply lower than the nearly 23 percent and 36 percent growth recorded in FY25 and FY24, respectively. The moderation in mutual fund asset growth came amid sustained volatility in Indian equities throughout the year. Market fluctuations were driven by elevated valuations, subdued earnings, geopolitical tensions including trade-related concerns, continued FII selling and the absence of AI-linked investment opportunities. More recently, selling pressure intensified following the US-Iran-Israel conflict, which pushed crude oil prices higher and raised concerns over India’s fiscal position. During FY26, the Sensex and Nifty declined 7 percent and 5 percent, respectively, while the BSE MidCap 150 and SmallCap 250 indices fell 1 percent and 6.5 percent. Despite the volatility, retail investor participation remained strong. SIP contributions during FY26 stood at Rs 3.5 lakh crore, up 20.7 percent from Rs 2.9 lakh crore in the previous year. The number of contributing SIP accounts increased to 9.72 crore from 8.12 crore a year ago. According to a recent Jefferies India report, the recent correction in Indian equities has improved valuations significantly, with the market’s earlier premium correcting sharply. India has moved from being expensive to fair and nearing attractive levels. The brokerage said most foreign institutional selling had already taken place earlier this year, indicating limited additional pressure from this segment. However, it flagged two key risks — any escalation involving Iran that could push up crude oil prices, and a slowdown in mutual fund inflows that could weaken a key source of market support and increase volatility. Among categories, large-cap funds saw AUM remain largely flat at Rs 3.66 lakh crore during the fiscal. In contrast, midcap and smallcap funds recorded growth of nearly 13 percent each, with AUM rising to Rs 4.18 lakh crore and Rs 3.35 lakh crore, respectively. Multi-cap funds saw a 14 percent increase in AUM, while value-contra, focused and sectoral thematic funds recorded marginal growth. ELSS schemes, however, saw a 6.4 percent decline in AUM during the fiscal. Most categories reported their slowest growth or sharpest decline since FY20.

Apr 13 2026, 05:01