India's mutual fund industry delivered exceptional performance in 2025, adding a staggering ₹14.00 lakh crore to its asset base and pushing total assets under management to a record ₹81.00 lakh crore by November. The remarkable growth was powered by unprecedented retail participation, record systematic investment plan inflows, and sustained investor confidence despite market volatility and foreign portfolio investor outflows.

Record AUM Growth and Industry Performance

The industry achieved its 13th consecutive annual increase in AUM, marking a significant milestone in India's investment landscape. According to Venkat Chalasani, Chief Executive Officer of AMFI, the industry's outlook remains positive with steady SIP inflows continuing to offset foreign portfolio investor outflows.

While the 21.00% growth rate was lower than the 31.00% rise recorded in 2024 and 27.00% increase in 2023, the longer-term trend remains robust. The industry has collectively added ₹50.00 lakh crore to its asset base over the last five years.

SIP Revolution Drives Sustained Growth

Systematic investment plans emerged as the backbone of industry growth, with annual SIP investments crossing ₹3.03 lakh crore in 2025 - the highest ever recorded. Monthly SIP contributions consistently exceeded ₹29,000.00 crore in September, October, and November, peaking at an all-time high of ₹29,529.00 crore in October.

Harsh Jain, Co-founder and COO of Groww, highlighted this structural transformation: "The steady rise in SIP inflows points to a deep structural change in investor behaviour, with SIPs increasingly becoming the default investment route across income groups, especially among younger investors."

Equity and Debt Fund Performance

Equity-oriented schemes attracted the largest investor interest, recording net inflows of ₹3.53 lakh crore and maintaining uninterrupted monthly net inflows since March 2021. The 49-player industry saw total inflows of ₹7.00 lakh crore till November, with approximately ₹3.22 lakh crore flowing into equity-oriented schemes and nearly ₹3.00 lakh crore into debt schemes.

Himanshu Srivastava, Principal Manager – Research at Morningstar Investment Research India, attributed the growth to "a combination of strong equity market performance and sustained retail participation through SIPs, along with ongoing financialisation of household savings and growing participation from first-time investors."

Market performance supported investor sentiment, with the Nifty 50 rising 8.40% and BSE Sensex gaining nearly 10.00% in 2025.

Gold Funds and Alternative Investment Growth

Gold funds witnessed exceptional traction, garnering inflows of ₹31,300.00 crore as investors sought safety amid economic uncertainty and geopolitical risks. Gold fund AUM surged dramatically from ₹44,595.00 crore in December 2024 to ₹1.10 lakh crore by November 2025.

Regulatory Framework Enhancements

SEBI introduced significant regulatory reforms to enhance transparency and reduce costs for investors. The regulator revamped the mutual fund expense framework by introducing the Base Expense Ratio (BER), which excludes statutory levies such as STT and GST from core costs. Brokerage caps were reduced and the additional exit load introduced in 2018 was withdrawn, with new rules taking effect from April 1.

Future Outlook and Market Dynamics

Chalasani emphasized the industry's positive long-term prospects: "Over the medium to long term, rising financial awareness, broader retail participation beyond metropolitan centres, and the sustained adoption of SIPs should continue to support healthy, resilient, and broad-based growth for the industry."

The sustained growth in domestic participation has positioned Indian retail investors as a stabilizing counterweight to volatile foreign flows, with fund flows expected to be guided by valuations and global developments. Investors are increasingly favouring large-cap, diversified, and hybrid strategies, reflecting a more mature and disciplined approach to wealth creation.

India's Mutual Fund Industry faced a significant slowdown in 2025, with fresh investor additions and new fund collections declining sharply compared to the previous year. The industry added only 5.8 million unique investors through November 2025, representing nearly half of the 10.6 million investors who joined in 2024.

Sharp Decline in New Investor Onboarding

The pace of new investor acquisition has moderated considerably after three consecutive years of strong expansion. This slowdown follows a period when equity markets delivered exceptional returns and retail participation surged across various investment segments.

NFO Collections Witness Steep Drop

New Fund Offer collections experienced an even more pronounced decline, falling to ₹63,631 crore in 2025 from ₹1.18 lakh crore in 2024. Active equity NFOs were particularly affected, raising only ₹29,148 crore through 51 launches compared to ₹91,118 crore mobilized via 69 active equity NFOs in the previous year.

This decline indicates reduced appetite for new thematic and sectoral fund launches, especially amid corrections in mid- and small-cap stocks that have disappointed many investors.

Industry Expert Perspectives

Akhil Chaturvedi, Chief Business Officer at Motilal Oswal Asset Management, explained that markets fundamentally depend on confidence and performance. "Over the last 12 months, many investors have not made money, with returns in several pockets turning negative. This has naturally led to a phase of time correction," he noted.

Sandeep Bagla, Chief Executive Officer of Trust Mutual Fund, observed that domestic equity mutual fund flows have clearly moderated during the year. "Mid- and small-cap segments have disappointed investors, reducing enthusiasm, especially among do-it-yourself investors. SIPs remain the only resilient source of flows, along with a few sporadic NFOs. Beyond that, incremental flows into equity schemes have been largely negligible," he said.

SIP Inflows Remain Resilient

Despite the overall slowdown in lump-sum and NFO investments, Systematic Investment Plans (SIPs) continue to provide stability to the industry. SIP inflows reached ₹3.03 lakh crore in 2025, marking a strong year-on-year increase and accounting for a growing share of overall equity inflows.

This trend underscores a behavioral shift among retail investors toward disciplined, long-term investing rather than tactical lump-sum investments. The resilience of SIP flows demonstrates investor commitment to systematic wealth creation despite market volatility.

Market Outlook and Future Expectations

Industry experts believe future market direction will depend on several global factors, including:

• Foreign institutional investor behavior
• China's earnings trajectory
• Clarity on international trade tariffs
• Geopolitical developments

As corporate earnings are expected to improve over the next two quarters and geopolitical and tariff-related uncertainties ease, the second half of 2026 is anticipated to be more constructive. Experts expect valuations to become more reasonable and growth to provide stronger support after June 2026.