Equity Mutual Fund AUM Surges 335% in Five Years, Hits ₹33.32 Lakh Crore in July 2025

Equity mutual funds have emerged as one of the most preferred investment avenues for retail investors, with assets under management (AUM) witnessing a sharp jump over the last five years. According to ICRA Analytics, equity MF AUM grew by 335.31%, reaching ₹33.32 lakh crore in July 2025 compared with ₹7.65 lakh crore in July 2020.

This growth reflects the increasing confidence of investors who are adopting long-term wealth-building strategies despite market volatility. The steady rise in systematic investment plans (SIPs) has been a key factor, helping investors remain disciplined and cushioned against sharp market swings.

SIPs Cushion Market Volatility

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ICRA noted that SIPs allow investors to benefit from rupee-cost averaging, where more units are purchased during market lows and fewer during highs. This disciplined approach reduces the impact of volatility and has encouraged investors to stay invested even during uncertain periods.

Equity inflows have seen a significant turnaround. From a net outflow of ₹3,845 crore in July 2020, inflows surged to ₹42,673 crore in July 2025. Every year, inflows grew 15.08% compared with July 2024, while every month, inflows rose sharply by 81.06% against June 2025, signalling a strong revival in investor sentiment.

Ashwini Kumar, Senior Vice President and Head of Market Data at ICRA Analytics, said investors are increasingly recognising that short-term volatility is part of the wealth creation journey. He added that sectoral and thematic funds recorded the highest inflows at ₹9,426 crore, followed by flexi-cap funds at ₹7,654 crore and small-cap funds at ₹6,484 crore. This shows investors’ appetite for diversification and new growth opportunities.

Strong Long-Term Performance

Equity mutual funds continue to deliver higher returns than traditional instruments such as fixed deposits, especially over the medium to long term. Even during volatile phases, three-year returns across most categories have remained positive, making them attractive to younger investors.

However, ICRA also highlighted that large inflows and redemptions can themselves drive volatility, particularly in mid- and small-cap segments. Despite this, SIP investors typically stay invested, providing stability.

Data shows that while one-year returns were negative across several categories due to volatility — with Dividend Yield Funds falling 5.40% and Contra Funds down 2.62% — long-term returns remain strong. Small Cap Funds delivered a three-year CAGR of 22.56% and a five-year CAGR of 31.70%. Mid Cap Funds followed closely with 22.20% over three years and 27.36% over five years. Multi Cap and Large & Mid Cap Funds also rewarded investors with more than 20% CAGR over three years and nearly 25% over five years.

Conclusion

The consistent rise in AUM and inflows highlights retail investors’ growing faith in equity mutual funds as a long-term wealth-building tool. With SIPs fostering disciplined investing and strong long-term returns across categories, equity MFs are expected to remain at the core of retail investors’ portfolios despite short-term volatility.