Choppy mkts dent equity MF inflows; investor count up only 5.2% in H1

MF investor growth dropped to 5.2% in H1 2025 from 12% a year ago as volatility hit lumpsum inflows, while SIPs and existing investor participation remained strong

Systematic investment plan (SIP) inflows continue to scale new highs, but mutual fund (MF) growth has stumbled on other fronts as market volatility, global uncertainties, and a slowdown in corporate earnings have soured investor sentiment.

 

New investor additions and lump sum inflows into equity schemes slowed considerably in calendar year (CY) 2025. The unique MF investor count rose just 5.2 per cent in the first half (H1) of 2025, compared to a nearly 12 per cent increase in the same period last year. The industry had 55.3 million unique investors as of June 2025, up from 52.6 million in December 2024.

 

Experts say the pace of investor additions is closely tied to equity market performance. “The key reason for the lower additions this year has been weak equity market sentiment,” said Amit Bivalkar, founder-director at Sapient Finserv.

 

“Several factors explain this trend, the most important being market volatility and the sharp correction that began after September 2024. As of now, the Nifty 500 is down about 2 per cent over the past year,” said Abhishek Dev, co-founder and chief executive officer of Epsilon Money.

 

The past six months also saw a moderation in lump sum inflows into equity schemes, along with a sharp drop in new fund offering (NFO) collection.

 

Equity schemes recorded average gross lump sum inflows of ₹36,000 crore in H1 CY2025, compared to ₹52,000 crore in the second half of CY2024. 

 

Lump sum inflows and investor base growth have remained subdued in recent months, even as the equity market staged a recovery.

 

The benchmark Nifty 50 index, which declined around 17 per cent from its September peak over the following six months, had recovered 15.5 per cent by the end of June 2025. Experts believe investors may be waiting for the market to gain momentum before committing to one-time investments.

 

“After the correction began in September 2024, many investors were buying the dip, but from February 2025 onwards, we’ve seen a clear drop in equity lump sum flows. While the market has largely recovered in recent months — which could lift lump sum inflows in July — they may still fall short of 2024 peaks unless we see a strong rally,” said Nilesh D Naik, head of investment products, Share.Market.

 

NFOs — typically a key driver of lump sum investments and new investor additions — have also declined this year. In H1 CY2025, MFs launched 25 active equity schemes, down from 30 in H1 CY2024. NFO collection dropped sharply from ₹37,885 crore to ₹10,690 crore over the same period.

 

Despite the broader slowdown in equity MF flows and new investor additions, participation from existing retail investors has remained strong. SIP inflows, which dipped slightly in January 2025, have been clocking new all-time highs for three straight months.

 

SIP-linked assets under management also rose to a new high of ₹15.3 trillion in June. “Robust SIP inflows and continued strong participation from existing investors show that the long-term appeal of MFs remains intact, even if new unique investor growth has moderated,” said Dev.