India's mutual fund industry posted steady growth in the second quarter of FY27 (Q2 FY27), with quarterly average assets under management (QAAUM) climbing 4.9% sequentially and 14.1% year-on-year to reach ₹89.51 lakh crore, according to a report by ICRA Analytics released on 28 October 2026. The expansion came despite heightened market volatility during the quarter, underscoring the sector's structural resilience.

Month-End AUM Dips from Record High

While the quarterly average remained robust, month-end industry AUM slipped from a record ₹87.08 lakh crore in August 2026 to ₹82.64 lakh crore in September 2026, according to the ICRA Analytics report. The decline was primarily driven by mark-to-market losses stemming from market corrections rather than capital withdrawal.

Notably, September's AUM figure was still 9.3% higher than the corresponding month a year earlier, reinforcing the industry's long-term upward trajectory. Rising retail participation and sustained systematic investment plan inflows remain the twin pillars of that growth.

Net Inflows and Equity Momentum

Net inflows into mutual funds remained positive at ₹1.44 lakh crore in Q2 FY27, though moderating from ₹2.05 lakh crore in the preceding quarter. The pullback was attributed chiefly to outflows from debt-oriented schemes and a sharper-than-usual redemption cycle in September 2026.

Equity-oriented schemes continued to anchor growth, attracting ₹92,293 crore in quarterly net inflows. Hybrid schemes saw slower inflows, while debt-oriented schemes recorded net outflows of ₹5,853 crore — reflecting a clear investor preference for equity-linked products amid evolving market conditions.

SIP Contributions Hit Fresh All-Time High

Investor participation reached a new milestone in September 2026, with total mutual fund folios rising to 28.62 crore. Monthly contributions through systematic investment plans (SIPs) touched a fresh all-time high of ₹32,490 crore, while the number of new SIP accounts registered in the month surged by 63.26 lakh.

'The continued expansion in investor base, coupled with healthy equity inflows, reinforces the structural growth outlook for the Indian mutual fund industry despite short-term market fluctuations,' the ICRA Analytics report noted.

Market Share and Industry Concentration

Top ten asset management companies maintained broadly stable market shares between Q1 FY27 and Q2 FY27, suggesting that competitive dynamics within the industry remained relatively unchanged even as aggregate AUM expanded. The stability at the top indicates that growth is being broadly distributed rather than concentrated in one or two large players.

Outlook

With SIP momentum at record levels and the retail investor base continuing to expand, the structural case for mutual fund growth remains intact. However, sustained market corrections could weigh on month-end AUM figures in the near term, even as QAAUM growth stays positive on the strength of regular inflows.