MF industry sees 7x growth in a decade; passive funds pick up pace: Motilal Oswal Mutual Fund study

The Indian mutual fund (MF) industry has witnessed a phenomenal expansion over the last decade, with assets under management (AUM) surging more than seven-fold to Rs 74.40 lakh crore as of June 2025.

A study by Motilal Oswal Mutual Fund, based on data from AMFI and ACEMF, reveals that equity funds continue to lead the Indian mutual fund space, holding 59.94 per cent of the total assets under management (AUM). Debt funds follow with a 26.53 per cent share, while hybrid funds account for 8.28 per cent and other categories contribute 5.26 per cent. One of the most striking shifts observed is the surge in passive investing, which now represents 17 per cent of the industry's AUM -- a substantial increase over the past few years.

In the April–June 2025 quarter alone, the mutual fund industry recorded estimated net inflows of Rs 3,98,000 crore. Debt funds led the inflows at Rs 2,39,000 crore, rebounding from the previous quarter's outflows. Equity funds followed with Rs 1,33,000 crore in net inflows, while commodities attracted Rs 9,000 crore. Active funds remained the primary driver, contributing Rs 3,62,000 crore, whereas passive funds garnered Rs 36,000 crore.

Within equities, broad-based funds emerged as the preferred choice, accounting for Rs 86,000 crore or 64 per cent of total equity inflows. Passive equity strategies captured a striking 106 per cent of flows in this category, highlighting growing investor interest in low-cost, benchmark-aligned options. Large cap funds led the passive equity segment, while flexi cap, small cap and mid cap topped among active strategies.

Thematic funds, however, saw a reversal with net outflows of Rs 2,400 crore, compared to Rs 8,400 crore inflows in the previous quarter. Despite this, select themes such as technology, business cycle and defence drew strong interest, with the latter alone accounting for Rs 1,800 crore in net inflows.

Debt fund resurgence was driven by constant maturity strategies, which attracted Rs 2,04,000 crore in net inflows, followed by corporate bond funds -- signalling rising institutional participation amid shifting interest rate expectations.

In hybrid funds, multi-asset strategies led the way, comprising 57 per cent of category inflows. Balanced advantage funds and equity savings funds also saw sustained interest, drawing Rs 4,200 crore and Rs 1,400 crore, respectively.

Additionally, the quarter saw 46 new fund offers (NFOs) that collectively mobilised Rs 6,506 crore, though a bulk of the flows remained concentrated among five leading asset management companies.

Pratik Oswal of Motilal Oswal AMC noted the rising traction in passive funds, citing their simplicity, transparency and alignment with long-term portfolio goals.