Mutual Fund Investors Return to Buying in October 2026

MUTUAL FUND INVESTORS BACK ON THE BUY SIDE IN OCT-26

MUTUAL FUND FLOWS OCTOBER 2026 – RAPID FIRE

In October 2026, open-ended mutual funds saw net inflows of ₹1,73,360 Crore across categories. Here is a quick look at the key flow narratives.

Debt funds saw big inflows of ₹1,13,438 Crore. The buying was persistent at the short end of the yield curve with longer term bond funds feeling the pressure.

Equity Fund inflows were -13.9% lower MOM at ₹32,994 Crore. For a change, Large & Mid-Cap Funds led the flows; followed by small cap funds, and flexi-cap funds.

Hybrid funds saw higher net inflows of ₹3,915 Crore. In line with strong inflows into liquid funds, the arbitrage funds also saw strong inflows in the month.

Passive fund inflows were 96.2% higher at ₹23,014 Crore for October 2026, amid strong inflows into equity index ETFs, gold ETFs, and silver ETFs.

The NFO collections in October 2026 improved to ₹3,829 Crore, while gross SIP flows in October 2026 were slightly lower at ₹32,160 Crore.

Closed ended funds continued to see pressure on flows, but they have not been too significant to make a difference overall. Let us turn to flow significance as a share of net AUM.

MF FLOW SIGNIFICANCE – THE MACRO PICTURE

When it comes to mutual fund flows; two things matter. The size of the flows and whether the swing is on the positive or negative side? Here is a quick macro picture.

With treasury outflows completed in September, the month of October saw positive flows into debt funds. Again, this was focused more at the short end of the yield curve, with selling still visible at the longer end of the curve.

Active equity fund flows were lower than the previous month, but flows into hybrid funds and passive funds picked up during the month. Overall, the month of October 2026 saw inflows of ₹1.73 trillion into open-ended funds. At a macro level, net flows were 2.08% of the net AUM.

ACTIVE DEBT FUNDS: SMART INFLOWS, BUT WEAK BREADTH

Despite the heavy flows into debt funds in October 2026, 13 out of the 17 categories of debt funds saw net outflows. However, inflows into liquid funds and overnight funds at the short end of the yield curve almost accounted for the entire positive flow.

The ranking of the above funds has been done on the significance of Flow/AUM ratio, irrespective of whether it is positive or negative. The top-3 are on the positive side, showing the extent to which the short-end funds dominated the flow narrative in October 2026.

Sectoral debt funds may offer a slightly skewed picture as the base AUM is too low. However, it is interesting to see investors getting interested in sectoral debt funds. It is a novel idea wherein investors are able to take a sectoral view on debt investments too. Debt fund flows overall stood at 6.03% of the net AUM as of October 2026.

ACTIVE EQUITY FUNDS: ALLOCATION THEME GAINS UPPER HAND

In the case of equity funds in October 2026, once again, 11 out of 13 fund categories saw net inflows while ELSS and Dividend Yield Funds saw outflows. The broad theme for the month continued to be allocation across capitalization and alpha hunting.

The 5 most significant in terms of Flow/AUM are all on the positive side. A significant shift has been that the large & mid-cap funds have dominated in terms of net flows during the month of October 2026. Equity fund flows overall stood at 0.89% of the net AUM as of October 2026, falling below the 1% mark, compared to the previous month.

Contra Funds saw a surprising pick up in net inflows during the month, largely due to the ICICI Pru Contra Fund NFO, which attracted inflows of ₹1,488 crore. For the month of October, Large & Mid-caps saw the heaviest inflows, followed by small cap funds, flexi-cap funds and mid-cap funds; in that particular order.

HYBRID ALLOCATION FUNDS: ARBITRAGE FUNDS LEAD THE INFLOWS

In the case of hybrid funds (including solutions funds and life cycle funds) in October 2026; 10 out of 13 hybrid categories saw positive flows. The net impact was in the positive. In sync with flows into liquid and overnight funds; even arbitrage funds saw strong inflows in October.

The life cycle funds are again at the top, although the data can be misleading due to the small base. With the outperformance quotient of gold and silver getting limited, there is a fall in interest in multi-asset allocation funds (MAAFs).

Equity Savings funds continue to see pressure in recent months due to the rather lackluster performance of these funds in recent years. Hybrid fund flows overall stood at 0.33% of the net AUM as of October 2026.

PASSIVE FUNDS: PRECIOUS METALS ARE BACK IN THE RECKONING

In the case of passive funds in October 2026; 9 out of the 10 fund categories saw net inflows, with only fund of funds (FOFs) investing overseas seeing outflows.

Hybrid ETFs and Hybrid Passives may be misleading due to the small base. The big news is that gold ETFs and silver ETFs are back to dominate the flow significance of passive funds. Equity Index ETFs continue to attract bulk of the inflows in absolute terms.

Interestingly, debt index funds and debt ETFs have also seen inflows during the month, which could indicate limited upside on interest rates. Passive fund flows overall stood at 1.51% of the net AUM as of October 2026.