Equity mutual funds witness sharp rise in India as investors eye wealth creation

Mumbai, Aug 29 The net AUM (Asset Under Management) of equity mutual funds surged by 335.31 per cent at Rs 33.32 lakh crore in July 2025, up from Rs 7.65 lakh crore in July 2020, a report showed on Friday.

Market volatility notwithstanding, equity mutual funds continue to maintain their sheen with retail investors steadily investing in these schemes with an aim towards long-term wealth creation, said the report by ICRA Analytics.

SIPs have become a popular tool for managing volatility, allowing investors to invest a fixed amount regularly, benefiting from rupee cost averaging — buying more units when prices are low and fewer when prices are high.

“Inflows into equity mutual funds has witnessed a sharp rise in the last few years as investors are increasingly adopting a long-term perspective, recognising that short-term market fluctuations are part of the journey towards wealth creation,” said Ashwini Kumar, Senior Vice President and Head Market Data, ICRA Analytics.

Historical data show that markets tend to recover and reward patient investors over time.

Sectoral/thematic funds drew the highest inflows at Rs 9,426.03 crore as investors, particularly in the retail segment, continue to seek new growth opportunities and explore avenues to generate alpha or higher returns.

“This was followed by flexi cap funds and small cap funds which attracted inflows to the tune of Rs 7,654.33 crore and Rs 6,484.43 crore respectively as investors prefer diversified allocation and higher returns,” said Kumar.

Inflows into equity mutual funds have witnessed a steady rise growing from an outflow of Rs 3,845 crore in July 2020 to an inflow of Rs 42,673 crore in July 2025.

On a year-on-year basis, inflows have increased by 15.08 per cent from Rs 37,082 crore in July 2024, while month-on-month, it has gone up by nearly 81.06 per cent as compared with Rs 23,568 crore in June 2025.

“Despite global uncertainties, domestic investors remain optimistic about India’s economic trajectory. This confidence has translated into sustained inflows into equity MFs, even during periods of high volatility,” Kumar added.

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