Sideshow to spotlight: FoFs weren't in the script, now they own the stage

₹15.6K cr floods in as tax reset, fund blitz, and asset bounce rewrite the playbook in Q1

Domestic fund of funds (FoFs) closed the April–June quarter of 2025–26 with net inflows of ₹15,617 crore — nearly four times the previous quarter — as a tax-code overhaul, a wave of new schemes, and a broad-based asset rally came together to revive the category.

 

June alone brought in a record ₹8,648 crore in net inflows, pushing the overall FoF asset base up 18 per cent quarter-on-quarter to ₹1.15 trillion, according to data collated by the Association of Mutual Funds in India. 

 

“The new sub-category under FoF, called Income Plus Arbitrage FoF, has drawn steady interest from both institutional and retail investors,” said Madhu Nair, chief executive officer, Union Asset Management Company. “It’s channelling sizeable flows into arbitrage and duration strategies through FoFs.” 

 

Of the 104 domestic FoFs now available — most functioning as exchange-traded fund feeder funds — gold and silver schemes account for over a quarter of total assets. A newer category that blends debt and arbitrage funds is also gaining traction as a tax-efficient alternative to pure-play debt schemes.

 

Higher market levels and a burst of new launches pushed up headline assets under management, placing FoFs among the fastest-growing mutual fund segments this quarter.