Within equities, broad-based funds emerged as the dominant category, garnering Rs 86,000 crore in net inflows. This segment captured 64% of total equity flows, 55% from active funds and a notable 106% from passive funds, highlighting the growing allocation toward passive equity strategies.
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Among active broad-based funds, flexicap led with Rs 15,800 crore, followed by smallcap at Rs 12,000 crore and midcap at Rs 10,800 crore. In the passive space, largecap funds remained the most allocated segment, reflecting a continued focus on blue-chip benchmarks.
A key development in the industry has been the steady rise of passive investing, which now accounts for approximately 17% of total AUM. While active funds continue to dominate in absolute terms, the growing share of passive strategies reflects broader adoption of low-cost, transparent, and benchmark-aligned approaches.
For the quarter ending June 2025, total estimated net inflows stood at Rs 39,800 crore. This was largely led by the debt segment, which drew Rs 23,900 crore, reversing the previous quarter’s outflows. Equities contributed Rs 1.33 lakh crore, while commodities added Rs 9,000 crore. Active strategies accounted for Rs 36.2 lakh crore of total inflows, while passive funds contributed Rs 36,000 crore.Thematic mutual funds, however, experienced net outflows of Rs 2,400 crore, in contrast to Rs 8,400 crore of inflows in the preceding quarter. Despite the overall drop, select themes such as Technology and Business Cycle attracted Rs 1,400 crore collectively, while the Defence theme alone garnered Rs 1,800 crore, reflecting increased allocation to macro-linked sectors.The resurgence in debt funds was overwhelmingly led by constant maturity strategies, which saw Rs 20,400 crore in net inflows, followed by corporate bond funds, indicating higher institutional allocations amid evolving rate dynamics.
In the hybrid segment, multi-asset funds accounted for 57% of the total net inflows within the category. Balanced Advantage Funds and Equity Savings Funds attracted Rs 4,200 crore and Rs 1,400 crore, respectively, indicating continued preference for balanced, risk-adjusted strategies.
The industry also saw active participation in new fund offerings, with 46 NFOs launched during the quarter, collectively mobilising Rs 6,506 crore. A significant portion of these inflows came from five asset management companies, indicating a degree of concentration in fund flows.
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“This quarter reflects a notable shift in portfolio allocation – a growing tilt toward well-diversified, resilient portfolios, complemented by a measured return to debt. What’s particularly encouraging is the increasing traction seen in passive investing. Indian investors are gradually recognising the structural benefits of passive funds — simplicity, cost-efficiency, and alignment with market benchmarks,” said Pratik Oswal, Head-Passive Business, Motilal Oswal Asset Management Company.
While active strategies continue to command investor confidence, particularly in the mid- and small-cap segments, passive funds are steadily emerging as a key component of long-term portfolios.
At a broader level, these trends point to an evolving investment environment: One that is more research-driven, risk-aware, and strategically focused. The conversation is no longer just about chasing alpha, but about achieving portfolio stability in an ever-changing economic landscape.
