Topic 6: MUTUAL FUND: LIGHTING UP

In August 2025, the Indian mutual fund industry experienced a period of robust activity marked by regulatory reforms, strong performance across categories, innovative product launches, and expanding investor participation. The most significant driver was the implementation of SEBI’s new mutual fund regulations, effective from July 1, which shaped market operations through August. These reforms mandated stricter deployment of New Fund Offer (NFO) proceeds within 30 business days, required senior AMC employees to invest in their own schemes to ensure “skin in the game,” and introduced enhanced stress testing, transparency norms, and greater flexibility in investor nominations. Parallel to regulatory strengthening, the industry saw a surge in product innovation and fund launches. Between August 5 and 12, Jio BlackRock Mutual Fund, a new entrant, introduced five low-cost index fund NFOs, tracking benchmarks such as Nifty 50, Midcap 150, Next 50, and Smallcap 250, along with a G-Sec-focused debt fund, with retail-friendly minimum investments of just ₹500. Mirae Asset Mutual Fund added to the passive segment with two new index funds open from August 11 to 25, while Edelweiss launched the Multi Asset Omni Fund of Funds, diversifying across equity, debt, and commodity ETFs. A landmark moment came when Quant Mutual Fund introduced India’s first Specialized Investment Fund (SIF), offering a long-short equity strategy aimed at sophisticated investors, underscoring the industry’s push toward expanding its product suite beyond traditional offerings. Performance-wise, the industry showed remarkable strength. By mid-August, total Assets Under Management (AUM) had crossed ₹74 lakh crore, more than seven times higher than a decade ago. Equity funds remained the dominant category, accounting for nearly 60% of AUM. Several large- and mid-cap funds generated monthly returns of 12–15%, while 18 equity funds posted gains exceeding 30% since the last year, fuelling investor inflows and enthusiasm. Debt funds also saw heavy inflows, reversing earlier outflows, as investors sought stability amid global volatility. Hybrid funds maintained steady interest due to their balanced profiles, while thematic funds witnessed selective outflows, highlighting investor caution toward niche strategies. Passive funds, particularly ETFs and index funds, gained traction, making up about 17% of total AUM, as investors increasingly preferred low-cost, benchmark-aligned options. Retail participation also continued to deepen through Systematic Investment Plans (SIPs), which registered monthly contributions of around ₹28,000 crore in July. Overall, August 2025 was a transformative month for the Indian mutual fund industry, defined by regulatory reforms, record AUM growth, innovative launches, and rising investor engagement across both traditional and alternative investment avenues.



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