The Indian Mutual Fund industry has seen significant changes over the past year. By analysing the data from late 2025 and early 2026, we can understand how the market is growing and where investors are placing their capital.
1. Market Size and Growth Trends
As of December 2025, the total Assets Under Management (AUM) of the Indian Mutual Fund industry stood at ₹80.23 lakh crore.
While there was a marginal monthly decline of 0.7% (down from ₹80.80 lakh crore in November) due to volatile markets and outflows from debt funds, the long-term growth remains steady. On a year-on-year basis, the industry grew by 19.9%, up from ₹66.93 lakh crore in December 2024.
2. Where is the Money Invested?
The industry is divided into several types of schemes. As of December 2025, the distribution is as follows:
- Equity-oriented schemes: 44.6% (The largest segment).
- Debt-oriented schemes: 22.8%.
- Other schemes (ETFs and Index funds): 18.2%.
- Hybrid schemes: 13.7%.
- Solution-oriented schemes: 0.7%.
Key Highlights:
- The industry witnessed its 62nd consecutive month of positive net inflows, totalling ₹26,723 crore in December.
- Gold ETFs saw their highest-ever monthly inflow of ₹11,647 crore during the same period.
3. Individual vs. Institutional Investment Patterns
There is a notable difference in how individual investors (Retail and HNIs) and institutional investors (Corporates and Banks) allocate their money.
- Individual Investors: Prefer growth-oriented assets. They hold 65% of their assets in Equity, 17.3% in Hybrid schemes, and only 7.9% in Debt.
- Institutional Investors: Prefer stability and liquidity. They hold 47.4% in Debt-oriented schemes and 33.9% in ETFs/Index funds, with only 10.9% in Equity.
4. How Investors Access the Market: Direct vs. Distributors
Investors choose between "Direct" plans (investing directly with the fund house) and "Distributor" plans (investing through an intermediary).
- Overall Market: 44.8% of investments are Direct, while 55.2% are through Distributors.
- Retail & HNIs: These investors rely heavily on distributors for guidance. Approximately 72% of Retail and HNI investments are made through distributors.
- Corporations & Banks: These institutional investors prefer Direct channels, accounting for 71.9% and 93.3% of their investments, respectively.
The data also shows that distributors bring in the majority of investments for Equity (72.4%) and Hybrid schemes (69.9%), while Direct channels dominate Debt-oriented schemes (75.8%).
5. A Closer Look at Direct Plan Investments
Focusing specifically on the Direct Plan segment as of January 2026, the total Average Assets Under Management (AAUM) was ₹40,02,583.93 crore. This is bifurcated into three main categories:
- "Do It Yourself" (DIY) Clients: ₹33,55,616.92 crore.
- Registered Investment Advisers (RIA): ₹5,54,924.17 crore.
- Portfolio Management Services (PMS): ₹92,042.83 crore.
Conclusion
The data shows that the Indian Mutual Fund industry is characterised by strong participation from individual investors in equity markets and a heavy reliance on institutional investors in the debt segment. While direct investing is the standard for large institutions and DIY investors, the majority of retail individuals continue to utilise distributor channels for their investment needs.
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