Domestic Mutual Funds Hold Record 10.6% Stake in NSE-Listed Companies

As of June 2025, domestic mutual funds (DMFs) have achieved a significant milestone by owning a record 10.6% of the total market capitalisation of NSE-listed companies. This surge reflects growing investor confidence, increased SIP inflows, and wider retail participation across active and passive mutual fund schemes.

Domestic Institutional Participation Hits Record High

As per the NSE Pulse report, DMFs surpassed foreign portfolio investors for the second straight quarter, marking their highest ownership since 2003. Active mutual funds contributed 8.6% of the total 10.6% stake, while passive funds, including ETFs and index funds, held 1.9%. Rising SIP contributions and new fund launches have greatly supported this development.

SIP Inflows and Market Expansion Fuel Growth

July turned out to be a historic month with SIP collections exceeding ₹28,000 crore and new fund offers reaching ₹30,000 crore. The total equity AUM jumped to ₹39.5 lakh crore in Q1 FY26, registering a 14.8% QoQ growth. On the passive side, the AUM rose 12.1% QoQ, touching ₹8.9 lakh crore. These sustained inflows signal strong retail investor confidence and disciplined investing behaviour.

Direct and Indirect Retail Ownership See Steady Rise

Individual investors directly owned 9.6% of NSE-listed companies, or ₹43.9 lakh crore, a jump of 12.9% on a quarterly basis. Indirect ownership via mutual funds also reached a record 8.9%. Together, individual investors now command an 18.5% share of the total market cap, marking a third consecutive quarter they have outpaced FPIs.

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Long-Term Structural Shift Towards Mutual Funds

Between FY15 and FY25, DMF ownership has trended upwards, with a brief pause in FY21 due to pandemic-induced economic headwinds. Since June 2021, however, SIP-led investing has resumed strong momentum. The expansion in passive investing is notable, with a 61.5% CAGR over the past decade, compared to 25.4% in active funds, though passive AUM started from a smaller base.

Conclusion

The record 10.6% holding of NSE-listed companies by domestic mutual funds marks a significant shift in India’s investment landscape. It reflects the growing role of retail investors and the steady evolution of mutual funds as dominant institutional participants in Indian equities.

Disclaimer: This blog has been written exclusively for educational purposes. The securities or companies mentioned are only examples and not recommendations. This does not constitute a personal recommendation or 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.

Investments in Mutual Funds are subject to market risks. Read all related documents carefully before investing.