New Investor Additions In Mutual Fund Industry Nearly Halves In 2025

India's mutual fund industry saw new investor additions nearly halve in 2025 and new fund offer (NFO) collections decline, as muted market returns and sustained volatility weighed on equity participation.

Industry data through November 2025 shows the mutual fund (MF) industry added 58 lakh unique investors during the year, compared with 1.06 crore in 2024. The pace of onboarding slowed after three years of expansion, when equity market gains supported higher retail participation.

The slowdown was most pronounced in new fund launches. Total NFO collections in 2025 stood at Rs 63,631 crore, compared with Rs 1.18 lakh crore in 2024. Active equity NFOs raised Rs 29,148 crore through 51 launches, down from Rs 91,118 crore mobilised via 69 such launches last year. Participation in new thematic and sectoral funds weakened amid corrections in mid- and small-cap stocks.

Fund flow data also reflected the slowdown. During April-November, gross inflows stood at Rs 2.75 lakh crore, while net inflows were Rs 2,372 crore as of Nov. 25. That compared with gross inflows of Rs 3.85 lakh crore and net inflows of Rs 97,256 crore in the year-ago period.

The market participation depends on confidence and performance, Akhil Chaturvedi, chief business officer at Motilal Oswal Asset Management said. “Over the last 12 months, many investors have not made money, with returns in several pockets turning negative. This has naturally led to a phase of time correction,” he said.

Sandeep Bagla, chief executive officer of Trust Mutual Fund, said domestic equity MF flows have moderated this year. “Mid- and small-cap segments have disappointed investors, reducing enthusiasm, especially among do-it-yourself investors. SIPs remain the only resilient source of flows, along with a few sporadic NFOs. Beyond that, incremental flows into equity schemes have been largely negligible,” he said.

Mumbai-based mutual fund distributor Vaibhav Rane said investors who entered equity markets during Covid focused on returns and faced volatility for the first time this year, prompting a cautious approach.

Despite weaker lump-sum investments and lower NFO activity, systematic investment plans continued to support inflows. SIP contributions reached Rs 3.03 lakh crore in 2025, marking a year-on-year increase and forming a larger share of overall equity inflows.

Market direction will depend on global factors, including foreign institutional investor behaviour, China's earnings performance and clarity on tariffs, according to experts.

As corporate earnings improve over the next two quarters and uncertainty linked to geopolitics and tariffs eases, the second half of 2026 is expected to see improved support, with valuations moderating and growth strengthening after June.