India’s Mutual Fund Flows – Dec 2025: Total Mutual Fund assets fall by 0.7% to Rs 80.23 lakh crs

Indian mutual fund industry ended December 2025 with assets of Rs 80.23 lakh crs compared to Rs 80.8 lakh crs in November 2025.  The AUM of the industry has grown by 19.9% over the last twelve months.  The Industry witnessed net outflows of Rs 0.66 (+0.32) lakh crs, with debt schemes showing outflows of 1.32 lakh crs and equity and hybrid schemes showing net positive inflows of Rs 28,054 (29,911) crs and Rs 10,756 (13,299) crs respectively.  Equity schemes saw an increase in assets to Rs 35.72 (35.66) lakh crs.  This was mainly due to net inflows.  Nifty 500 moved down by 0.26% (+1%)  and Nifty 50 also decreased by 0.28% (1.92%) with mid caps down by 0.53% and small caps were down by 0.28%.  One year returns for all indices are slightly positive except for small caps.  Three and five year numbers continue to show healthy returns.

• Net flows in equity schemes decreased slightly to Rs 28,054 crs from Rs 29,911 crs last month.  Though there have been no negative inflows for almost five years.  Flows have increased due to five new NFOs collecting Rs 3,568 (2,498) crs.
• Net inflows in various categories were as under and have declined compared to last month.  ELSS and Dividend Yield funds saw net outflows:

– Sectoral/Thematic Funds: ₹ 946 (1,865) crs

– Flexi-Cap Funds: ₹ 10,019 (8,135) crs

– Small-Cap Funds: ₹ 3,824 (4,407) crs

• Mid-Cap Funds: ₹ 4,176 (4,487) crs    

Monthly SIP inflows have grown 221% from Rs 13,306 crs in Nov 22 to Rs 31,002 crs in Dec 2025.  Net inflows have fallen below SIP inflows indicating that redemptions are more than lumps investments in equity schemes. 

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– Total debt fund AUM was ₹ 18.10 (19.36) lakh crore, a 6.5% decrease compared to last month and up by about 8.3% compared to last year.

This category saw a net outflow of Rs 1.32 lakh crs compared to an inflow of 0.25 lakh crs last month.  Liquid, Money market and short duration funds saw outflows while overnight funds were flat.

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– Hybrid funds’ assets increased to Rs 11.0 (10.88) lakh crs thus staying above the ten lakhs crore mark.  Net inflows into hybrid funds stood at Rs 10,756 (13,299) crs, led by Multi Asset Allocation funds, which saw inflows of Rs 7,426 (5,315) crs.  Conservative hybrid funds have seen poor inflows due to low returns.

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AUM of passive funds rose 3.5% to 14.57 (14.02) lakh crs on the back of a surge in gold prices and rising inflows into these funds.  Index ETFs and Funds still form a huge chunk of these schemes.

SIF inflows were healthy in December and grew to Almost Rs 2,000 crs.  Distributors need to pass a derivatives exam to start selling these schemes.  Also, most of these schemes seem to be implementing arbitrage strategies and are not pure long short funds.   AUM of SIFs is Rs 4,832 crs.  As more and more AMCs, launch these schemes, the AUM will continuously grow over the next few months.  The performance of the equity schemes should be watched for a few months before taking an allocation to the same.

FoFs collected almost Rs 10,250 (5,000) crs of net inflows.  The taxation of FoFs has been brought in line with their underlying schemes and hence these category of schemes should be considered by each investor.  There are domestic and international FoFs, debt, thematic as well as hybrid and multiple asset FoFs.  Those who find it challenging to choose from thousands of schemes can choose a few FoFs which will ensure that they have a good asset allocation as well as a decent diversification within each asset class.  Those looking at sectoral or thematic funds would be wise to choose from amongst these funds.

Gold ETFs and Multi Asset Funds have seen a sharp increase in inflows in one month due to the good performance of gold over the last 12 months.  Investors should start their investing journeys with Multi Asset, hybrid and domestic FoF schemes.  A combination of 3-4 such schemes should be adequate for most investors.    Investors should also not chase returns but stick to their asset allocations.  Given the already high increase in prices, future returns may not mimic past returns.

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