Active equity share in mutual funds' AUM falls first time since pandemic

Active equity funds lost share in mutual fund AUM for the first time since Covid as investors shifted towards passive, hybrid and precious metal-backed products

Active equity schemes, which have been the biggest beneficiaries of the surge in mutual fund (MF) penetration after Covid, witnessed the first decline in their share of the industry's assets under management (AUM) in financial year 2026 (FY26).

 

The share of active equity funds fell from 44.8 per cent in March 2025 to 43.4 per cent in March 2026, according to data from the Association of Mutual Funds in India. Hybrid schemes and passive funds continued to gain share during the year, while debt funds remained on a declining trajectory.

 

The pause in active equity’s sharp share gains since FY20 came amid subdued equity market performance, and a steep rise in precious metal prices. Gold and silver exchange traded funds (ETFs), which attracted record inflows in FY26, helped drive the share of passive funds in industry AUM from 14 per cent to over 19 per cent. The increase in passive AUM was also supported by mark-to-market (MTM) gains.

 

For equity schemes, the 8.6 per cent rise in AUM during FY26 was largely driven by systematic investment plan (SIP) inflows, as lumpsum investments remained low and MTM gains were limited. SIP inflows — nearly 80 per cent of which are directed towards active equity schemes — surged to ₹3.5 trillion in FY26 from ₹2.9 trillion in FY25.