India’s Mutual Fund Industry to See Strong Inflows in FY26

India's mutual fund industry is expected to grow in the financial year 2025–26, with estimated inflows of US$40–45 billion. This steady growth will mainly be driven by Systematic Investment Plans (SIPs), according to a report by Bernstein. 

SIPs to Drive Growth 

The report says that monthly SIP inflows of around US$3 billion, as seen in April 2025, will keep the mutual fund inflows strong throughout FY26. While the expected US$40–45 billion is slightly lower than the record US$55 billion seen in FY25, it is much higher than FY24’s total inflow of US$30 billion and still above the long-term average. 

Retail investors are playing a key role in this trend. Even during market corrections, Indian investors have continued investing through SIPs. This shows discipline and long-term commitment, which is helping the industry remain steady. 

Market Correction Didn’t Stop Inflows 

Although the fourth quarter of FY25 saw slightly lower inflows month-on-month, the report highlights that the numbers were still better than expected. Mutual fund inflows stayed strong despite a prolonged market correction, even outperforming what was reflected in the share prices of listed asset management companies. 

Lump-Sum Inflows Also Expected 

While SIPs will continue to be the main source of inflows, the second half of FY26 may also see some lump-sum investments. The steady pace of retail investments helps reduce the ups and downs (cyclicality) of the business. This consistency supports better valuations for asset management companies. 

Outlook for Assets Under Management (AuM) 

India’s mutual fund assets under management (AuM) are expected to grow in FY26 and FY27. This growth will come from both fresh inflows and moderate gains in asset prices (mark-to-market). However, these gains may be slower than the country’s nominal GDP growth. 

For now, Bernstein favours large-cap stocks when estimating gains in mutual fund portfolios. 

Conclusion 

India’s mutual fund industry looks strong and stable heading into FY26, thanks to regular SIP contributions and growing investor confidence. This is likely to support continued growth and improved valuations for fund houses. 
 
Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions. 

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