Rise of the Mutual Funds: They own 10.6% of companies listed in NSE

Kolkata: NSE Pulse Report has stated that mutual funds have now come to hold as much as 10.6% in companies that are listed in NSE (National Stock Exchange). The figure pertains to the quarter April-June 2025. According to reports, active funds accounted for 8.6% of the holding while passive funds came to possess 1.9% ownership. The relentless chanellising of money through mutual funds, especially SIP (Systematic Investment Plans) is thought to be behind this growth.

Data suggests that the domestic mutual funds have established a lead over FPIs (foreign portfolio investors) for the second consecutive quarter. This was last witnessed 22 years ago in 2003. The extent of holdings rose by 1.4 percentage points compared to what it was a year ago.

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Incidentally, the inflows in the mutual fund industry was in spate in July -- equity inflows stood over Rs 42,000 crore, AUM sailed past Rs 75 lakh crore, SIPs rose to more than Rs 28,000 crore and NFOs mopped up Rs 30,000 crore. These numbers will reflect in the Q2 or July-September FY26 figures.

Reports also stated how the domestic mutual fund industry has advanced relentlessly between FY15 and FY25 with the sole exception of FY21 due to the pandemic. The reason was the pandemic was a rude shock for household savings amid economic disruption, job loss and shaken confidence.

Passive investments have hit the headlines over the past few years. The holding of domestic mutual funds in NSE-listed companies, especially through index funds has risen fast in the past few years. The AUM of passive equity funds has surged by more than 61.5% CAGR in the past 10 years. It has left the 25.4% CAGR of actively managed equity funds far behind (partly attributable to the lower base effect). Analysts say that the rise in index funds is attributable to lower costs of passive funds as opposed to active funds. This category has become so popular that passive funds have risen four-fold in the past five years.

In the April-June period the AUM of passive equity schemes jumped 12.1% (quarter-on-quarter) and reached Rs 8.9 lakh crore. On the other hand, the AUM of actively managed equity funds grew by 14.8% (quarter-o-quarter) to reach Rs 39.5 lakh crore.

The report also stated that the holding of NSE-listed companies was at 3.9%, an all-time high. The holding by active funds stood at 17.3%.