Flexi-cap funds outshine all equity categories with ₹95,000-crore inflows

Flexi-cap funds have emerged as the biggest winners in India's mutual fund industry, attracting the highest net inflows among equity schemes over the past year as investors sought diversified exposure amid volatile markets, according to Franklin Templeton India's latest mutual fund dashboard.

 

The category garnered net inflows of ₹95,154 crore over the last 12 months, including ₹5,176 crore in May 2026 alone, making it the top-selling equity fund category. Most equity fund categories registered positive net inflows during the month, indicating broad-based investor confidence despite market fluctuations. 

Flexi Cap Funds have topped net sales over last 12 months at Rs 95,154 crore, in the month of May alone it witnessed inflows of Rs 5176 crore

 

   

Among hybrid schemes, Multi Asset Allocation Funds (MAAFs) also remained in favour, attracting ₹69,219 crore over the past 12 months, including ₹3,929 crore in May. 

Multi Asset Allocation Funds Top Net Sales Over Last 12 Months among hybrid funds.

 

Individual investors dominate

 

India's mutual fund industry is becoming increasingly retail-driven, with individual investors now accounting for over 60 per cent of the industry's assets under management (AUM), overtaking institutional investors by a wide margin as systematic investment plans (SIPs) continue to attract record inflows despite volatile equity markets, said the  report by Franklin Templeton.

 

Individual investors—including retail investors and high-net-worth individuals (HNIs)—held 60.38 per cent of the industry's AUM in May 2026. HNIs accounted for 33.71 per cent, while retail investors contributed 26.67 per cent. Institutional investors, comprising corporates, banks, financial institutions and foreign investors, held the remaining 40 per cent.

 

Industry AUM crosses ₹81 lakh crore

 

The mutual fund industry's total AUM stood at a record ₹81.6 lakh crore at the end of May 2026 after adding more than ₹9.4 lakh crore over the past year.

 

The industry has grown at a compound annual growth rate (CAGR) of 20 per cent over the last five years and 19 per cent over the past decade, reflecting sustained investor participation across market cycles.

 

Equity mutual funds remained the biggest contributor to growth.

 

Equity fund AUM rose to ₹36.18 lakh crore, up 12.7 per cent from ₹32.10 lakh crore a year ago, while SIP AUM increased 17 per cent year-on-year to ₹17.12 lakh crore. SIP assets now account for 29 per cent of total equity fund AUM, up from 27.9 per cent last year—the highest level in recent years.

 

SIP culture strengthens despite volatility

 

Monthly SIP inflows continued to scale new highs.

 

Gross SIP inflows touched ₹30,954 crore in May 2026, up 16 per cent from ₹26,688 crore in the same month last year. The figure has doubled in less than three years.

 

The number of SIP accounts rose to 10.47 crore, an increase of 15.6 per cent year-on-year, while the average monthly SIP contribution edged up to ₹2,957 from ₹2,947 a year ago.

 

Franklin Templeton noted that SIP inflows have continued to rise despite weak and volatile market conditions.

 

Aggregate SIP contributions reached almost ₹3.5 lakh crore in FY26—around seven times higher than FY17, translating into a 26 per cent CAGR over the period. In just the first two months of FY27, cumulative SIP inflows had already crossed ₹60,000 crore, highlighting the growing preference among investors for disciplined, long-term investing.

 

Domestic investors overpower FPIs

 

The report also highlights the growing influence of domestic institutional investors (DIIs) in Indian equity markets.

 

Over the 12 months ended May 2026, DIIs recorded net inflows of ₹8.9 lakh crore, while foreign portfolio investors (FPIs) were net sellers to the tune of ₹4.7 lakh crore.

 

The trend reinforces how domestic savings, channelled through mutual funds and SIPs, are increasingly cushioning Indian markets from volatile foreign capital flows.

 

Passive investing gains ground

 

Passive investing also continued to gather pace.

 

Passive fund AUM increased 23 per cent year-on-year to ₹14.77 lakh crore in May 2026 from ₹11.97 lakh crore a year earlier.

 

Its share of the mutual fund industry's overall AUM has risen steadily from 14 per cent in May 2022 to 18 per cent in May 2026, reflecting increasing investor preference for index-based investment strategies.

 

Mutual funds spread beyond metros

 

The mutual fund industry's geographic footprint is also expanding beyond India's largest cities.

 

The share of assets from B30 locations has increased from 16 per cent in December 2020 to 18 per cent in May 2026.

 

AUM from B30 locations has grown at a 23 per cent CAGR, outpacing the 19 per cent CAGR recorded by the top 30 (T30) cities. The share of B15 cities in industry AUM also inched up from 29.6 per cent in March 2021 to 29.8 per cent in March 2026, indicating gradual deepening of mutual fund penetration outside the country's largest urban centres.