India’s Mutual Fund industry grows 7 times in decade, passive funds gains ground: Report

Mumbai: The total Assets Under Management (AUM) of the Indian Mutual Fund (MF) industry stand at Rs 74.40 lakh crore, marking more than a sevenfold growth over the past decade, a report said on Monday.

Of the total AUM, equity commands the largest share at 59.94 per cent, followed by debt at 26.53 per cent, hybrid at 8.28 per cent, and other categories accounting for 5.26 per cent, according to Motilal Oswal Mutual Fund.

According to the report, a key development in the industry has been the steady rise of passive investing, which now accounts for approximately 17 per cent of total AUM.

While active funds continue to dominate in absolute terms, the increasing share of passive strategies reflects broader adoption of low-cost, transparent, and benchmark-aligned approaches, the report stated.

In the quarter ending June 2025, total estimated net inflows stood at Rs 3.98 lakh crore.

This was largely led by the debt segment, which drew Rs 2.39 lakh crore, reversing the previous quarter’s outflows. Equities contributed Rs 1.33 lakh crore, while commodities added Rs 9,000 crore.

Meanwhile, active strategies accounted for Rs 3.62 lakh crore of total inflows, with passive funds contributing Rs 36,000 crore, the report highlighted.

“This quarter reflects a notable shift in portfolio allocation — a growing tilt toward well-diversified, resilient portfolios, complemented by a measured return to debt,” said Pratik Oswal, Head – Passive Business, Motilal Oswal Asset Management Company Ltd. (MOAMC).

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, he added.

Within equities, broad-based funds emerged as the dominant category, garnering Rs 86,000 crore in net inflows.

This category captured 64 per cent of total equity flows — 55 per cent from active funds and a notable 106 per cent from passive — indicating increased allocation to passive equity strategies, the report noted.

Among active broad-based funds, Flexi Cap led with Rs 15,800 crore, followed by Small Cap at Rs 12,000 crore and Mid Cap at Rs 10,800 crore.

In the passive space, Large Cap funds remained the most allocated segment, reflecting continued focus on blue-chip benchmarks.

Thematic mutual funds, however, experienced a net outflow of Rs 2,400 crore, in contrast to Rs 8,400 crore inflows in the preceding quarter.

IANS