Money moves beyond equities: Commodities see ₹33,000 crore inflows

Multi-asset funds see ₹20,000 crore inflows in diversification push

Investor allocations across mutual funds showed a clear shift toward diversification and asset-allocation strategies in the December 2025 quarter, even as equity funds continued to dominate overall inflows.

 

According to the Motilal Oswal Mutual Fund report Where the Money Flows, the mutual fund industry recorded estimated net inflows of about ₹1.74 lakh crore during the quarter, reflecting continued investor participation despite macroeconomic uncertainties. 

 

The industry’s total assets under management (AUM) stood at around ₹80.23 lakh crore as of December 2025, more than six times higher than a decade ago.

 

"This highlights the structural shift in household savings towards financial assets, aided by SIP flows, greater digital accessibility and rising awareness of mutual funds as a core investment vehicle. December recorded SIP inflows of ₹31k crore," said the report.

 

In the December 2025 quarter, the mutual fund industry recorded estimated net inflows of ₹1.92 lakh crore. Active funds accounted for ₹1.17 lakh crore, while passive strategies accounted for ₹75,000 crore inflows. Equity funds remained a significant contributor, recording net inflows of ₹1.12 lakh crore. Within equities, broad-based funds capturing 88% of active flows and ₹98,000 crores in inflows, underscoring the investor tilt towards diversified strategies. Large-Cap Passive Funds, Flexicap Active Funds and arbitrage strategies accounted for a significant share of flows during the quarter.

 

Equity funds still dominate flows

 

Equity funds remained the largest recipient of investor money, attracting about ₹1.12 lakh crore in inflows, accounting for roughly 58–64% of total quarterly flows, though their share declined compared with earlier periods. Within equities, broad-based funds captured nearly 88% of equity inflows, led by strong participation in large-cap and flexi-cap strategies. 

 

Key segments included:

 

• Passive large-cap funds: about ₹24,000 crore inflows
• Active flexi-cap funds: about ₹22,000 crore inflows
• Mid- and small-cap funds: about ₹24,000 crore combined inflows, though flows declined sequentially
• Arbitrage funds also attracted around ₹10,500 crore, making them the second-largest equity flow category during the quarter. 

 

However, thematic funds faced pressure, recording overall outflows of roughly ₹6,500 crore, particularly in PSU, manufacturing and infrastructure-focused strategies.  

The mutual fund industry’s Assets Under Management (AUM) stood at ₹80.23 lakh crore as of December 2025, reflecting steady momentum in investor participation and an increased preference for market-linked investment avenues.

 

Commodities and multi-asset funds gain traction

 

One of the biggest shifts during the quarter was strong investor interest in commodities and asset-allocation strategies.

 

Commodity funds recorded about ₹33,000 crore in inflows, representing a 56% quarter-on-quarter increase, signalling rising investor interest in diversification beyond equities. 

 

Similarly, multi-asset funds attracted about ₹20,000 crore, growing nearly 39% quarter-on-quarter and accounting for roughly 70% of hybrid fund inflows, highlighting the growing popularity of diversified investment strategies. 

 

Overall hybrid funds collected around ₹29,000 crore in inflows, though flows moderated compared with the previous quarter.

 

Debt funds see marginal outflows

 

Debt mutual funds recorded marginal net outflows of about ₹1,000 crore during the quarter, reflecting continued caution amid interest-rate uncertainty. 

 

Within the debt segment:

 

• Constant-maturity and dynamic bond funds together saw about ₹5,000 crore inflows
• Target-maturity and gilt funds saw outflows of roughly ₹5,000 crore
• Liquid funds alone attracted about ₹27,000 crore, showing continued demand for short-term parking of fund

 

This pattern suggests investors preferred short-duration and low-volatility debt strategies. 

The industry has expanded over 6x in the last decade, with AUM growing from ₹12 lakh crore in 2015 to over ₹80 lakh crore in 2025

 

Passive funds continue gaining share

 

Passive investing continues to grow steadily in India. Passive funds now account for around 18% of mutual fund AUM, with cumulative passive equity flows reaching about ₹3.7 lakh crore between December 2020 and December 2025. 

 

The report notes that both active and passive funds remain attractive, with the quarter recording roughly ₹1.17 lakh crore in active flows and ₹57,000 crore in passive flows.

 

"The December 2025 quarter highlights a multi-asset investor approach, with significant flows into equities, commodities and diversified strategies. While equity retained investor favour through broad-based and systematic approaches, the commodity segment’s resurgence reflects investor demand for inflation hedge and portfolio diversification. Passive investing continues to gain ground steadily, with passive funds accounting for 23% of equity flows, but active strategies remain central to investor portfolios. Overall, investor behaviour points towards preference for broad-based and diversified exposure, aligned with structural growth themes and evolving macroeconomic conditions," said the report.