Mutual Fund AUM Falls 10.1% in March 2026 Even as Retail Flows Stay Strong

India’s mutual fund industry saw a sharp decline in assets under management in March 2026, according to Motilal Oswal’s latest monthly tracker. The fall was driven largely by market correction during the month, even though investor participation remained healthy.

Net inflows strengthened despite heightened volatility. Retail investors continued to support the market through systematic investment plans and steady equity allocations.

Overall AUM Trends in March 2026

Total mutual fund AUM declined 10.1% month-on-month to ₹73.7 trillion in March 2026. The correction affected major categories including equity, liquid, income, ETFs and balanced funds.

Equity AUM dropped 9.3% month-on-month to ₹35.1 trillion after the Nifty fell 11.3% during the same period. The fall marked an 11‑month low for equity assets under management across the industry.

Equity Flows and Redemption Activity

Gross equity inflows reached an all-time high of ₹1,024 billion in March, rising 41.4% month-on-month. Redemptions also increased 24.6% month-on-month to ₹539 billion.

This resulted in net inflows of ₹485 billion, the highest in 17 months. The increase from ₹292 billion in February reflected strong investor appetite for equities, despite short-term market volatility.

Surge in SIP Contributions

Systematic investment plan contributions continued to strengthen the retail flow base during the month. SIP inflows hit a record ₹320.9 billion, up 7.5% month-on-month and 23.8% year-on-year.

The data indicated that small and long-term investors remained consistent in their investment behaviour. The steady rise in SIP participation provided stability to industry flows and helped offset market-led AUM contraction.

Sector Allocation Shifts During the Month

Mutual funds adjusted their sector positioning in March based on shifting market conditions. Allocations to Healthcare increased to 7.8%, up 50 basis points month-on-month.

Technology exposure rose to 7.3%, an increase of 40 basis points month-on-month. Utilities also saw a rise in allocation, reflecting defensive preferences.

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Conclusion

Motilal Oswal’s report shows that the decline in industry AUM during March 2026 was driven primarily by market correction rather than reduced investor participation. Retail inflows remained consistent, with SIPs providing a strong foundation for overall fund flows.

Sectoral shifts showed a tilt towards defensives such as Healthcare and Utilities, while positions in Private Banks and Automobiles were trimmed. Institutional inflows helped counterbalance foreign outflows, supporting overall market stability during the month.

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