Key Trends Shaping the Future of India's Mutual Fund Sector
Where’s the Indian mutual fund sector going ahead? 6 big trends to watch out for
The Economic Times
Image: The Economic Times
The Indian mutual fund sector is undergoing significant changes, with a notable decline in large-cap investments and a surge in multi-asset allocation funds. As of March 2026, large-cap funds' share of total equity assets under management (AUM) dropped to 11.4%, while sectoral and thematic funds gained traction, reflecting a shift in investor preferences towards higher-risk options.
- 01Large-cap funds' share of total equity AUM decreased from 18.2% in March 2021 to 11.4% by March 2026.
- 02Sectoral and thematic funds saw a significant rise, with AUM growing nearly fivefold from ₹98,080 crore in March 2021 to ₹4,77,309 crore in March 2026.
- 03Multi-asset allocation funds became essential, with AUM increasing from ₹14,795 crore in March 2021 to ₹1,73,762 crore by March 2026.
- 04SIP inflows reached an all-time high of ₹32,087 crore in March 2026, marking a decade-long trend of increasing investment discipline.
- 05The overall equity AUM more than doubled from ₹15,17,082 crore in March 2023 to ₹31,97,698 crore by March 2026.
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The Indian mutual fund sector is experiencing transformative trends, particularly in investor preferences and asset allocations. Large-cap funds have seen a consistent decline in their market share, dropping from 18.2% in March 2021 to 11.4% by March 2026, despite an absolute growth in assets under management (AUM) from ₹1,78,324 crore to ₹3,66,045 crore. In contrast, sectoral and thematic funds have surged, with AUM increasing nearly fivefold from ₹98,080 crore to ₹4,77,309 crore during the same period, driven by narratives around infrastructure and manufacturing. Multi-asset allocation funds have also emerged as a significant player, with AUM skyrocketing from ₹14,795 crore to ₹1,73,762 crore, fueled by the performance of gold and silver. Additionally, systematic investment plan (SIP) inflows have reached a historic high of ₹32,087 crore in March 2026, reflecting a decade of growing investment discipline among Indian investors. Overall, the total equity AUM more than doubled from ₹15,17,082 crore in March 2023 to ₹31,97,698 crore by March 2026, indicating a robust expansion in the mutual fund industry.
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The shift in investor preferences towards multi-asset and thematic funds indicates a growing appetite for diversified investment strategies, which may influence the overall stability and performance of the Indian financial market.
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