Topic 6: MUTUAL FUND

In December 2025, India’s mutual fund industry navigated a mixed but resilient environment, shaped by equity market volatility, structural shifts in investor behaviour and a few high-profile industry developments. A key highlight was the ICICI Prudential AMC IPO, which opened between December 12 and 16 and raised about ₹10,602 crore, drawing strong investor interest and underscoring confidence in the long-term growth of the asset management business. The listing brought renewed visibility to the sector at a time when industry assets under management (AUM) were hovering around ₹80–82 lakh crore, supported more by mark-to-market gains than by aggressive net inflows. Despite intermittent FII outflows and market consolidation, retail participation remained stable, with SIP inflows staying robust at over ₹29,000 crore for the month, pushing annual SIP collections beyond ₹3 trillion for the first time and reinforcing the stickiness of domestic flows At the same time, fund houses adjusted portfolios cautiously. Cash holdings, which had been pared by nearly ₹7,000 crore earlier during market rallies, remained elevated on a year-to-date basis at around ₹2.01 lakh crore, reflecting a preference for liquidity and selective deployment. New fund offer (NFO) collections continued to disappoint, with year-to-date mobilisation falling to about ₹63,600 crore by November, weighed down by tighter SEBI regulations, fewer thematic launches and subdued investor appetite amid volatile equity conditions. This led to a slowdown in new investor additions, which stood at roughly 5.8 million, and shifted fund-house focus away from NFOs toward established schemes.
Flow trends across segments highlighted this recalibration. Equity mutual funds saw moderated net inflows, largely SIP-driven, with flexi-cap and mid-/small-cap categories attracting interest even as lump-sum investments stayed cautious. Debt schemes experienced net outflows of around ₹8,400 crore, reflecting liquidity needs and cautious corporate treasuries. In contrast, hybrid funds recorded healthy inflows near ₹12,000 crore, driven by demand for arbitrage and multi-asset strategies, while passive funds continued to gain share, with AUM exceeding ₹14 lakh crore, supported by steady inflows into gold and silver ETFs. Overall, December reflected a mutual fund industry that remained structurally strong, supported by disciplined retail participation, even as near-term flows adjusted to market volatility and regulatory changes.



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