Mumbai, August 31, 2025 — India’s equity mutual fund industry has witnessed an extraordinary expansion over the past five years, with assets under management (AUM) soaring by 335.31% to ₹33.32 lakh crore in July 2025, up from ₹7.65 lakh crore in July 2020, according to data released by ICRA Analytics.
This remarkable growth reflects a deepening investor base, rising financial literacy, and a shift toward long-term wealth creation through market-linked instruments. Systematic Investment Plans (SIPs) have played a pivotal role in this transformation, allowing investors to commit fixed monthly amounts and benefit from rupee cost averaging — buying more units when prices are low and fewer when prices are high.
Equity mutual fund inflows have shown consistent strength, reversing from a net outflow of ₹3,845 crore in July 2020 to a robust inflow of ₹42,673 crore in July 2025. On a year-on-year basis, inflows rose 15.08% from ₹37,082 crore in July 2024, while month-on-month growth stood at 81.06% compared to ₹23,568 crore in June 2025.
Sectoral and thematic funds attracted the highest inflows at ₹9,426 crore, followed by flexi-cap funds at ₹7,654 crore and small-cap funds at ₹6,484 crore. This trend indicates a growing appetite among retail investors for diversified portfolios and higher-return opportunities.
Ashwini Kumar, Senior Vice President and Head of Market Data at ICRA Analytics, commented, “Inflows into equity mutual funds have witnessed a sharp rise in the last few years as investors are increasingly adopting a long-term perspective, recognizing that short-term market fluctuations are part of the journey toward wealth creation. Historical data shows that markets tend to recover and reward patient investors over time”.
Performance-wise, small-cap funds delivered stellar returns of 31.70% over five years and 22.56% over three years. Mid-cap funds followed with five-year returns of 27.36% and three-year returns of 22.20%, outperforming traditional savings instruments such as fixed deposits.
Despite global economic uncertainties and market volatility, domestic investor confidence in India’s growth trajectory remains strong. The equity mutual fund industry’s robust expansion underscores its role as a key vehicle for retail wealth creation and financial inclusion. With disciplined investing and strategic diversification, mutual funds continue to empower investors to navigate market cycles and build long-term financial resilience.
