India’s equity mutual fund landscape witnessed steady expansion during the financial year 2025–26, with average assets under management (AAUM) recording a notable year-on-year increase. According to data compiled from the Association of Mutual Funds in India and analysed by Abakkus Mutual Fund, equity-oriented mutual funds reported a 17.38% rise in AAUM as of March 2026.
The total equity AAUM stood at approximately ₹33.54 lakh crore, compared to ₹28.57 lakh crore recorded in the same period last year. This growth comes despite phases of volatility in equity markets, indicating sustained investor participation and consistent inflows into equity schemes throughout the year.
Steady Growth Amid Market Fluctuations
The increase in AAUM highlights the resilience of the equity mutual fund segment during FY26. Market conditions during the year were marked by intermittent fluctuations influenced by both domestic and global factors. However, inflows into equity funds remained stable, largely supported by continued participation from retail investors.
Systematic investment patterns and long-term allocation strategies appear to have contributed to maintaining consistent inflows, helping equity schemes expand their asset base even during uncertain market phases.
Flexi Cap Funds Lead the Expansion
Among all equity mutual fund categories, flexi cap funds emerged as the strongest performers in terms of growth. The average AUM of flexi cap schemes increased to ₹5.28 lakh crore in March 2026, up from ₹4.22 lakh crore a year earlier, reflecting a growth rate of 25.10%.
This category also strengthened its position within the equity mutual fund universe, with its share in total AAUM rising to 15.75% from 14.77%. As a result, flexi cap funds became the largest segment among equity-oriented schemes during the period.
The growth in this category indicates a preference for investment strategies that offer flexibility in allocation across market capitalisations, enabling fund managers to adjust portfolios based on evolving market conditions.
Mid-Cap and Small-Cap Funds Continue Momentum
Mid-cap and small-cap funds also maintained strong growth trajectories during FY26. Mid-cap funds reported a 22.74% increase in AAUM, reaching ₹4.38 lakh crore. Their share in total equity AAUM rose to 13.05%, reflecting continued investor interest in this segment.
Similarly, small-cap funds recorded a 20.33% rise in AAUM, taking the total to ₹3.47 lakh crore. These funds accounted for 10.35% of the overall equity mutual fund assets.
The sustained expansion in mid- and small-cap categories suggests ongoing interest in segments that are often associated with higher growth potential, despite their relatively higher volatility compared to large-cap investments.
Sectoral and Thematic Funds Maintain Presence
Sectoral and thematic funds remained among the larger categories within the equity mutual fund space. Their AAUM stood at ₹5.01 lakh crore as of March 2026.
However, their share in total equity AAUM experienced a slight decline, falling to 14.93% from 15.52% in the previous year. This indicates that while the absolute asset base continued to grow, other categories expanded at a faster pace, leading to a marginal reduction in relative share.
Slower Growth in Large-Cap and Hybrid Categories
In contrast to the faster-growing segments, large-cap funds recorded comparatively moderate growth. Their AAUM increased to ₹3.87 lakh crore, but their share declined to 11.55% from 12.21% a year earlier.
This trend suggests a relative shift in allocation patterns, with investors possibly diversifying into categories offering broader or more dynamic exposure.
Large and mid-cap funds showed stronger growth, with AAUM rising by 23.39% to ₹3.14 lakh crore, maintaining a share of 9.37%. Multi-cap funds also expanded significantly, registering a 24.14% increase in AAUM to ₹2.10 lakh crore, accounting for 6.27% of total equity assets.
Limited Growth in Select Categories
Some categories within the equity mutual fund space witnessed relatively modest expansion during the year. Equity Linked Savings Schemes (ELSS), for instance, recorded a marginal growth of 1.99%, with AAUM reaching ₹2.30 lakh crore. Their share declined to 6.85%, indicating slower relative growth compared to other segments.
Value and contra funds grew by 14.20%, taking their AAUM to ₹2.04 lakh crore and maintaining a share of 6.08%. Focused funds recorded a 16.99% increase in AAUM, reaching ₹1.64 lakh crore.
Dividend yield funds remained the smallest category, with AAUM of ₹30,604 crore, contributing just 0.91% to the overall equity mutual fund assets.
Changing Dynamics Within Equity Mutual Funds
The overall trends in FY26 reflect evolving investor preferences within the equity mutual fund space. Categories offering flexibility and exposure to growth-oriented segments, such as flexi cap, mid-cap, and small-cap funds, saw stronger expansion.
At the same time, relatively stable or tax-oriented categories, including large-cap funds and ELSS, experienced slower growth in comparison. This shift highlights changing allocation patterns within the equity mutual fund ecosystem.
Summary
Equity mutual funds recorded a 17.38% increase in average assets under management in FY26, reaching ₹33.54 lakh crore. The growth was led by flexi cap funds, which emerged as the largest category, followed by strong expansion in mid-cap and small-cap segments. While sectoral funds maintained a significant presence, large-cap and ELSS categories saw relatively slower growth. Overall, the data reflects a shift towards more flexible and growth-oriented investment categories within the equity mutual fund space.
Disclaimer:
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