MUMBAI: Despite a choppy market that delivered a negative 7% return in FY26—marking the second-worst performance for benchmark indices after the pandemic-hit FY20—the mutual fund industry recorded a year-on-year growth of nearly 13%, with assets under management (AUM) rising to Rs 73.73 lakh crore in March 2026 from Rs 65.74 lakh crore a year earlier.
However, a sharp correction in March significantly capped annual growth. Industry AUM declined by Rs 8.3 lakh crore during the month, falling from Rs 82.03 lakh crore in February to Rs 73.73 lakh crore. Without this steep drop, annual growth would have been closer to 25%.
In comparison, the industry had expanded 23.11% in FY25, with AUM increasing from Rs 53.40 lakh crore in March 2024 to Rs 65.74 lakh crore in March 2025—marking its third consecutive year of over 20% growth.
According to the Association of Mutual Funds in India, the decline in March AUM was driven by market volatility, with benchmark indices falling more than 11% during the month. The industry body noted that overall growth would have been significantly weaker if not for strong inflows into equity-oriented schemes, exchange-traded funds (ETFs), and systematic investment plans (SIPs).
Net inflows into equity schemes surged 55.7% to Rs 40,450.26 crore in March, up from Rs 25,978 crore in February, marking the highest monthly inflow since July 2025. This rise came despite the sharp market decline, which was attributed to geopolitical tensions in West Asia and broader macroeconomic concerns.
SIP inflows, a key driver of retail participation, rebounded to Rs 32,087 crore in March, an increase of about 7.5% from Rs 29,845 crore in February. The uptick partly reflected calendar effects, as some February instalments were processed in March, but it also indicated sustained investor participation despite market volatility.
The number of contributing SIP accounts rose to 9.72 crore from 9.44 crore in the previous month. However, churn remained elevated: while around 52.8 lakh new SIPs were registered, approximately 53.4 lakh were discontinued or matured, resulting in a stoppage ratio of about 101—indicating closures exceeded new registrations.
Despite this, the overall trend remains stable, with active participation continuing to grow. SIP AUM, however, declined to Rs 15.11 lakh crore from Rs 16.64 lakh crore, largely due to mark-to-market losses following the market correction.
ETFs emerged as another growth driver during the year, although momentum moderated in March. Gold ETF inflows cooled sharply, falling 57% to Rs 2,265.7 crore from Rs 5,254.9 crore in February, signalling a normalisation after strong earlier inflows. Assets under management for gold ETFs also declined to Rs 1.71 lakh crore from Rs 1.79 lakh crore.
Silver ETFs, too, remained under pressure for the second consecutive month, reflecting easing safe-haven demand after a surge earlier in the year. However, continued inflows suggest that investors still view precious metals as an important diversification tool amid ongoing macroeconomic and geopolitical uncertainty.
The total number of mutual fund folios rose to 27.39 crore in March, with a net addition of 33.63 lakh folios over February. Retail folios accounted for 20.82 crore, up from 20.64 crore in the previous month.
Retail AUM stood at Rs 42.89 lakh crore, marking the 61st consecutive month of positive equity inflows, a streak that began in March 2021.
During the month, 24 new mutual fund schemes were launched—23 open-ended and one close-ended—raising a total of Rs 3,985 crore.
Venkat Chalasani, Chief Executive of AMFI, said the industry continues to see steady investor participation. He noted that equity inflows have now extended to 61 consecutive months, reflecting sustained confidence in mutual funds as a long-term wealth creation vehicle. SIP inflows, he added, highlight the growing preference for disciplined, systematic investing.
Navneet Munot, Chief Executive of HDFC Asset Management Company, said that despite heightened volatility driven by geopolitical developments, domestic investors have remained resilient and continued to invest with conviction. He added that this structural shift towards systematic investing bodes well for the long-term stability and depth of capital markets.
Himanshu Srivastava of Morningstar India said the trend reflects how investors are responding to volatility. “The correction appears to have been viewed more as a buying opportunity rather than a trigger for risk aversion,” he noted.