Retail Class Rising: Indian Mutual Funds, Insurance Companies Now Hold More Equity Than Foreign Investors

India's domestic institutions—comprising mutual funds and insurance companies—now hold more equity assets than foreign portfolio investors (FPIs), marking a significant milestone. This shift has been driven by sustained inflows from retail investors.

As of July 2025, mutual funds and insurance companies collectively held Rs 72.67 lakh crore in equity assets under custody, surpassing the Rs 71.96 lakh crore held by FPIs.

According to NSDL data, foreign portfolio investment assets under custody have declined by over Rs 2.6 lakh crore over the past 12 months. In contrast, domestic institutions have seen an increase of Rs 4.17 lakh crore during the same period.

Retail Flow Drives Surge

The growth in domestic equity assets is largely attributed to retail investors, who have increased their indirect exposure through equity mutual fund schemes and equity-linked insurance policies. Mutual funds alone saw a Rs 5.13 lakh crore rise in assets under custody, while insurance companies experienced a decline of Rs 96,567 crore since July 2024.

Despite a Rs 15 lakh crore erosion in the market value of large-cap stocks over the past year, the rise in assets under custody highlights the resilience and strength of retail flows, which have continued to grow month after month.

In July alone, net inflows into equity growth schemes stood at Rs 42,702 crore, while hybrid schemes attracted Rs 20,879.5 crore.

SIP Momentum Continues

Systematic Investment Plans (SIPs) have seen consistent growth, with gross monthly flows reaching an all-time high of Rs 28,464 crore. In FY25, total SIP inflows stood at Rs 2.89 lakh crore, and in the first four months of FY26 alone, Rs 1.09 lakh crore has already been invested.

SIP assets under management reached Rs 15.19 lakh crore at the end of July, up from Rs 13.09 lakh crore a year earlier.

Despite a subdued market in recent months, gross SIP flows have continued to rise. Tax incentives introduced in the 2025 budget have added nearly Rs 9,000 crore in disposable income for salaried employees, who have preferred to invest in equity markets contributing to the steady increase in monthly SIP contributions.