India’s Mutual Fund Industry AUM Falls by ₹2.72 Lakh Crore in February, Marking Biggest Drop in 5 Years

The Indian mutual fund industry witnessed a sharp decline in Assets Under Management (AUM) in 5 years as a result of a downturn in the equity market and reduced inflows across most categories.

According to data from the Association of Mutual Funds in India (AMFI), the industry’s AUM fell by ₹2.72 lakh crore in February 2025, bringing the total to ₹64.53 lakh crore.

Mutual Funds AUM Sees Biggest Drop Since March 2020

The latest decline marks the sharpest drop in AUM since March 2020, when the industry recorded its largest-ever month-on-month fall of nearly ₹5 lakh crore.

The selloff during that period was triggered by the COVID-19 pandemic, which led to a 23.3% plunge in the Nifty 50 index in a single month.

Over the years, AUM has experienced significant fluctuations. In June 2022, the industry saw a decline of ₹1.6 lakh crore, while December 2024 recorded a more moderate drop of ₹1.1 lakh crore.

However, February 2025’s ₹2.72 lakh crore slump signals renewed market stress. Data for March 2024 remains unspecified.

Equity Fund Inflows Drop as Market Selloff Continues

Total inflows into equity mutual funds fell 26.5% month-on-month in February 2025, reaching ₹29,242 crore, as per AMFI data.

The broader stock market downturn also impacted the Nifty 50, which recorded its fifth consecutive monthly decline, falling by 6% in February alone. Over the past five months, the benchmark index has lost a cumulative 14.3%, reflecting weakened investor sentiment.

SIP Inflows Remain Steady

Systematic Investment Plan (SIP) inflows for February stood at ₹25,999 crore, reflecting a 1.5% decline. The drop was primarily attributed to the fewer number of trading days in the month rather than a shift in investor behaviour.

Recent Developments in the Mutual Fund Industry

Following a strong performance in 2023, the mutual fund industry continued its growth momentum into 2024, recording a remarkable ₹16.2 lakh crore surge in assets. This expansion was driven by a buoyant equity market, robust economic growth, and rising investor participation.

The industry had surpassed the ₹50-lakh crore AUM milestone in December 2023, adding nearly ₹14 lakh crore to its total assets in just over a year.

However, post-COVID-19, the mutual fund sector has witnessed a decline of over ₹1 lakh crore on only four occasions, highlighting the significance of February 2025’s sharp drop.

Conclusion 

The Indian mutual fund industry’s sharp AUM decline in February 2025 underscores the impact of market volatility and reduced inflows.

While equity fund inflows weakened, SIP investments remained steady. Despite recent setbacks, the industry’s long-term growth trajectory remains positive, driven by rising investor participation and strong economic fundamentals.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their research and assessments to form an independent opinion about investment decisions.

Investments in the securities market are subject to market risks, read all the related documents carefully before investing.