Mutual Fund Industry Sees Modest Growth Amid Market Volatility

Overview of Mutual Fund Growth

The mutual fund sector's assets under management (AUM) increased by 12.2 percent, amounting to Rs 8 lakh crore, reaching a total of Rs 73.73 lakh crore in FY26, according to the latest figures from the Association of Mutual Funds in India (AMFI). This growth rate marks the slowest pace in three years, primarily due to ongoing fluctuations in the Indian equity markets. In comparison, the sector experienced growth rates of nearly 23 percent and 36 percent in FY25 and FY24, respectively.

Market pressures escalated following the US-Iran-Israel conflict, which significantly impacted the global economy, particularly after the blockage of the Strait of Hormuz. This situation led to a surge in crude oil prices and raised concerns regarding India's fiscal stability.

Despite these challenges, retail investor engagement remained robust, with systematic investment plan (SIP) contributions for FY26 reaching Rs 3.5 lakh crore, reflecting a 20.7 percent increase from Rs 2.9 lakh crore the previous year. The number of active SIP accounts rose to 9.72 crore, up from 8.12 crore a year earlier.

According to AMFI, large-cap funds maintained a steady AUM of Rs 3.66 lakh crore throughout the fiscal year. In contrast, midcap and smallcap funds experienced growth of nearly 13 percent each, with AUM climbing to Rs 4.18 lakh crore and Rs 3.35 lakh crore, respectively. Multi-cap funds also saw a 14 percent rise in AUM, while value-contra, focused, and sectoral thematic funds exhibited slight growth. However, equity-linked savings schemes (ELSS) faced a 6.4 percent decline in AUM during the fiscal year, with many categories reporting their slowest growth or most significant declines since FY20.