Mutual Fund Industry Navigates a Transformative 2025 Amid Volatility and Growth
The Indian mutual fund industry witnessed a landmark year in 2025, marked by regulatory reforms, new product launches, the debut of Specialised Investment Funds (SIFs), and resilient investor participation despite market volatility. Equities and commodities emerged as the top-performing asset classes, while Sebi undertook a comprehensive overhaul of mutual fund regulations to enhance transparency and investor protection.
Data from the Association of Mutual Funds in India (AMFI) shows that the industry continued to expand steadily, driven by strong retail inflows, rising Systematic Investment Plan (SIP) contributions, and growing interest in passive and hybrid strategies.
Equity Mutual Funds Remain the Cornerstone of Investor Inflows
Equity schemes retained their dominance in 2025, attracting net inflows of Rs 3.22 lakh crore between January and November. Monthly inflows remained robust, with Rs 29,911 crore in November, Rs 24,690 crore in October, and Rs 30,422 crore in September. Inflows peaked in July at Rs 42,702 crore, supported by positive retail sentiment and consistent SIP contributions.
The steady flow of money into equity funds underscores investors’ long-term confidence in equities, even amid bouts of volatility. Fund managers noted that retail investors largely stayed invested, using market corrections as opportunities to add exposure.
Also Read : Mid- And Small-Cap Stocks Take The Lead As Indices Rise Up To 1% And Select Shares Jump
Debt and Hybrid Funds See Mixed Trends
Debt mutual funds experienced sharp fluctuations through the year. While net inflows for January–November stood at Rs 2.52 lakh crore, November saw outflows of Rs 25,693 crore, following strong inflows of Rs 1.6 lakh crore in October. Earlier in the year, April and July recorded heavy inflows of Rs 2.19 lakh crore and Rs 1.07 lakh crore, respectively, while March saw outflows of Rs 2.03 lakh crore.
Hybrid schemes, meanwhile, gained traction as investors looked for balanced strategies amid uncertain markets. Hybrid funds collected Rs 1.46 lakh crore in the first 11 months, with November inflows of Rs 13,299 crore, reflecting steady demand for diversified allocations.
Passive Funds Expand Footprint Despite Moderating Inflows
Passive investing continued to grow in prominence. According to NSE data, passive fund Assets Under Management (AUM) reached Rs 13.72 lakh crore as of November 2025, accounting for 17 percent of total MF AUM. Although inflow momentum moderated, passive funds mobilised Rs 0.98 lakh crore in FY26 so far, compared with Rs 1.42 lakh crore in FY25.
Exchange Traded Funds (ETFs) remained the dominant segment:
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ETFs AUM: Rs 10.47 lakh crore
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Index funds AUM: Rs 3.25 lakh crore
Equity-oriented passive funds led allocations, followed by debt and commodity ETFs, reflecting India’s equity-centric passive investment trend.
Industry AUM Crosses Rs 80.5 Lakh Crore
Overall mutual fund AUM crossed Rs 80.5 lakh crore in November 2025, supported by flows into equity, hybrid, and passive categories. Equity AUM alone stood at Rs 35.66 lakh crore, highlighting sustained participation.
ICRA data shows open-ended equity funds have grown sharply over five years—from Rs 9 lakh crore in November 2020 to around Rs 36 lakh crore. Flexi-cap funds recorded the strongest growth, rising over 25 percent, while multi-cap and large-and-mid-cap categories grew nearly 25 percent and 23 percent, respectively.
Market Performance Mixed, Commodities Steal the Show
Fund performance reflected a volatile market environment. As per Value Research data (December 29):
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Large-cap funds delivered 7.9 percent YTD returns
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Flexi-cap and large-and-mid-cap funds posted low single-digit gains
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Small-cap funds underperformed, declining 6.3 percent YTD
Thematic funds showed divergence. Banking and auto funds outperformed, while technology and pharma lagged. Commodities dominated returns, with silver surging nearly 162 percent YTD and gold rising over 78 percent, reinforcing their role as hedges during uncertainty.
SIPs Prove Resilient Despite Higher Stoppages
SIP contributions remained a pillar of industry stability. Monthly SIP inflows rose from Rs 26,400 crore in January to Rs 29,445 crore in November, crossing Rs 29,000 crore for the first time in September.
While SIP stoppage ratios spiked earlier in the year—peaking at 296 in April—they moderated significantly in the second half, indicating that new registrations largely offset exits.
SIFs Make Their Debut, New AMCs Enter the Market
A major highlight of 2025 was the launch of Specialised Investment Funds (SIFs), designed to bridge the gap between mutual funds and PMS. With a minimum investment of Rs 10 lakh, SIFs attracted interest from sophisticated investors. By November, five schemes had garnered around Rs 2,900 crore in AUM.
The industry also saw new entrants, taking the total number of AMCs to 54, including Abakkus MF, Capitalmind MF, Choice MF, and Jio BlackRock MF.
Sebi’s Regulatory Overhaul Reshapes the MF Landscape
Sebi implemented a sweeping overhaul of MF regulations in 2025, revising Total Expense Ratio (TER) norms, capping brokerage limits, simplifying disclosures, and tightening scheme categorisation. The regulator also announced that REITs will be classified as equity from January 1, 2026, opening new avenues for mutual fund participation.
Investor Takeaway: A Mature, Evolving Industry
2025 marked a year of consolidation and evolution for India’s mutual fund industry. Strong retail participation, resilient SIPs, and regulatory clarity helped the industry navigate volatility while laying the foundation for sustainable growth in 2026.
