India’s mutual fund sector has experienced a significant change, with assets under management (AUM) rising to Rs. As of June 2025, 74,40,000 crore (US$ 848 billion) represents a sevenfold increase over the last ten years, according to Motilal Oswal Mutual Fund. Equity funds continue to lead with a 59.94% share, while debt funds have notably returned, making up 26.53% of the AUM. In the first quarter of FY26, debt mutual funds saw net inflows of Rs. 2,39,000 crore (US$ 27 billion), primarily from institutional investors who prefer constant maturity and corporate bond approaches. Hybrid funds maintained a steady level of interest, primarily driven by multi-asset allocation offerings. Significantly, the quarter experienced 46 new fund offers (NFOs) collecting Rs. 6,506 crore (US$ 742 million), primarily propelled by leading asset management companies (AMCs). Passive investing is rapidly emerging as a structural trend in India’s mutual fund sector, representing 17% of total AUM. Passive funds saw net inflows of Rs. 36,000 crore (US$ 4.11 billion) in Q2 FY25, showcasing their increasing attractiveness because of their simplicity, cost-effectiveness, and alignment with market needs. In the equity segment, active broad-based funds led in inflows, featuring flexi cap Rs. 15,800 crore (US$ 1.80 billion), small cap INR. 12,300 crore (US$ 1.40 billion), and mid cap Rs. 10,800 crore (US$ 1.23 billion) at the forefront. Thematic funds, conversely, encountered Rs. 2,400 crore (US$ 274 million) in withdrawals. Nonetheless, specialized sectors such as defense and technology continued to draw investor attention. The change indicates a more developed investor group, with a growing emphasis on balanced, long-term approaches in both active and passive sectors