Mutual Fund Industry Hits New High: Equity AUM Crosses ₹40 Trillion

In a significant milestone for the Indian mutual fund industry, the total assets managed by equity mutual fund schemes, including both active and passive categories, have crossed the ₹40 trillion threshold for the first time in May 2025. This development highlights the expanding role of equity investments in shaping the overall growth trajectory of the mutual fund landscape in India.

Equity Mutual Funds Lead Industry Growth

Equity schemes have emerged as the primary growth driver for the mutual fund industry. Rising stock market values and consistent investor contributions, especially through systematic investment plans (SIPs), have bolstered the equity mutual fund segment. Over the past few years, the growth in equity (AUM) has consistently outperformed the expansion of the overall mutual fund industry.

Equity Share in Total AUM Hits 57%

In May 2025, equity mutual funds made up 57% of the total mutual fund industry AUM. This marks an increase from 55% in May 2024, indicating growing investor preference for equity-based investments. The increasing share also reflects the strong performance of equity markets, alongside increased investor confidence in long-term wealth creation through equities.

Recovery after Market Pullback Boosts AUM

The growth in equity AUM had temporarily slowed after September 2024 due to a broader market correction. However, the momentum picked up again as markets recovered. As of the end of May 2025, the equity AUM rose to ₹40.9 trillion. This represents a 4.5% increase over April and a 17% rise over the past three months, signalling a robust revival in both market sentiment and investor flows.

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Systematic Investment Plans Fuel Inflows

One of the major contributors to the resurgence in equity AUM has been the steady inflow of investments via SIPs. Retail investors have continued to channel funds regularly into equity mutual funds, reinforcing the role of disciplined investing in wealth accumulation. The consistency in monthly SIP contributions has played a significant role in sustaining AUM growth even during periods of market volatility.

Conclusion

Active equity funds held the lion’s share of equity AUM, accounting for 78% of the total as of May 2025. Passive equity funds, including index and exchange-traded funds, made up the remaining 22%. The dominance of active management reflects investor preference for fund managers’ ability to generate alpha, although passive investing is gradually gaining traction.

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