NFO Mobilisation Drops 42% in H1 FY26; Equity Inflows Down 74%

The mutual fund industry witnessed a sharp slowdown in New Fund Offer (NFO) activity during April-September 2025. As per Cafemutual, total mobilisation dipped 42% to ₹41,785 crore from ₹71,854 crore in the same period last year, with equity-oriented funds posting the steepest decline. 

Equity Funds See Sharpest Decline in NFO Mobilisation 

Equity NFOs reported a significant fall as collections declined 74% from ₹59,827 crore in H1 FY25 to ₹15,658 crore in H1 FY26. Sectoral and thematic funds, which dominated the previous year’s collections, saw a 76% slide to ₹12,185 crore.  

Multi-cap fund inflows dropped 79% to ₹1,113 crore. Flexi-cap and large & mid-cap categories also witnessed reduced participation. However, small-cap funds rose over 226% to ₹1,127 crore, indicating selective investor interest. 

Hybrid Funds Hold Steady, Multi-Asset Schemes Excel 

Hybrid schemes maintained their performance with ₹3,251 crore mobilised, almost unchanged from the previous year. Notably, multi-asset allocation funds surged 95% from ₹1,594 crore to ₹3,102 crore, capturing over 95% share of hybrid NFOs. Arbitrage funds doubled their mobilisation to ₹97 crore, while equity savings and other hybrid options remained relatively subdued. 

Read More: AMFI Asks SEBI Not to Reduce TER of Mutual Fund Schemes! 

Passive Funds Moderate After FY25 High 

Passive schemes experienced correction after strong momentum last fiscal. Index funds and ETFs together mopped up ₹3,517 crore, a steep 57% drop from ₹8,142 crore in H1 FY25. Although 39 index funds were launched, market saturation and limited innovation may have dampened investor enthusiasm. Other ETFs saw collections decline 44% to ₹287 crore. 

Debt Funds Led by Liquid and Money Market Categories 

Liquid and money market funds marked a major comeback. Liquid fund inflows shot up nearly 2,930% to ₹9,252 crore from ₹639 crore, becoming the largest contributor to NFO mobilisation. Money market funds added ₹6,285 crore, while medium to long-duration debt categories saw no activity. Investors appeared to favour low-volatility short-duration instruments amid market uncertainty. 

Conclusion 

H1 FY26 saw overall muted NFO activity with notable declines in equity and passive categories. However, the surge in liquid and multi-asset fund inflows indicates a clear tilt towards lower-risk and diversified investment options. 

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. 

Mutual Fund investments are subject to market risks, read all scheme-related documents carefully.