Mutual Funds folio accretion tapers further to 12.63 lakhs in May 2026

Mutual Funds folio accretion tapers further to 12.63 lakhs in May 2026

MUTUAL FUNDS ADD 12.63 LAKH FOLIOS IN MAY 2026

Open ended funds added just 12.63 lakh folios in May, compared to 14.01 lakh folios in April and an impressive 33 lakhs in March. Elevated risk perception in the market, volatility, and the rising SIP stoppage ratio are taking its toll on folio accretion. Incidentally, the folio accretion of open-ended funds was above 50 lakhs in January 2026 and has been steadily falling since. Folio accretion was positive for all categories, other than debt, but distinctly lower than previous months. Here are the details of folio addition across categories in May 2026.

While debt funds added a robust 2.15 lakh folios, equity funds added 7.78 lakh folios in the month of May 2026. Equity folio accretion is sharply below April. Hybrid funds added 2.34 lakh folios in the month. However, passive funds added just 0.36 lakh folios in May, due to folio contraction in index ETFs and gold ETFs. However, passive folios did not contract in May, like in April 2026. Within the index ETF category, the pressure of folio contraction was seen more in debt index ETFs. Here are the top 5 in each category in terms of folio accretion ratio.

ACTIVE DEBT FUND FOLIOS: CONTRACTION AT LONG AND SHORT END

For the month of May 2026, active debt funds added a total of 2.15 lakh folios or 2.53% over the previous month. Here are the 5 most significant folio changes by category.

Data Source: AMFI

Out of the 16 categories of debt funds, 11 categories saw folio contraction, while the other 5 categories saw folio accretion. If you look at the top 5 active debt fund categories in terms of folio change in May 2026; Liquid funds were positive, while the other significant folio shifts in Long Duration Funds, Gilt Funds, Gilt Funds with 10-Year Constant Duration and Dynamic Bond Fund were all on the negative side.

In fact, all the significant negative thrust came from the longer end of the yield curve. Investors appear to be wary of longer duration debt, as higher inflation is likely to harden interest rates in the economy. This is normally a negative signal for bond valuations and tends to depress bond prices. Those concerns are reflected in bond funds at the long end.

EQUITY FUNDS FOLIO ACCRETION POSITIVE; FOCUSED ON ALLOCATION AND ALPHA

For the month of May 2026, active equity funds added a total of 7.78 lakh folios or 0.42% growth over the previous month. Here are the 5 most significant folio changes by category.

Data Source: AMFI

Like in the case of flows, even folio accretion was focused on the folio accretion side. The folios story was also driven by 2 interesting themes. In the above list, flexi-cap funds, large & mid-cap funds, and multi-cap funds represent a cap-diversification strategy. At the same time; mid-cap funds and small cap funds represent alpha hunting; as an aggressive strategy. Most investors are preferring to hunt for alpha in small cap and mid-cap funds, rather than taking the concentration risk of sectoral and thematic funds. Large cap funds have continued to see tepid accretion in folios, as bulk of the large cap demand has shifted to the passive segment.

HYBRID FUNDS – FOLIOS SHIFT FOCUSSED ON TREASURY AND ALLOCATION

For the month of May 2026, hybrid allocation funds added a total of 2.34 lakh folios or 0.91% over the previous month. Here are the 5 most significant folio changes by category.

Data Source: AMFI

If you look at the most significant funds in terms of folio accretion, all are on the positive side. Arbitrage Funds dominated, but have been cyclical on treasury demand. Others that dominated in terms of high folio growth are the allocation fund categories like the multi asset allocation funds (MAAFs), Balanced Hybrids, and Equity Savings Funds. MAAFs appear to be losing momentum, as the lure of gold and silver allocation appears to be gradually reducing.

PASSIVE FUNDS WITNESS FLAT FOLIOS AMID MIXED TRENDS

For the month of May 2026, passive funds saw accretion of a mere 0.36 lakh folios or 0.06% over the previous month. Here are the 5 most significant folio changes by category.

Data Source: AMFI

In the last few months, we saw passive investors pivoting away from gold and silver ETFs to equity index ETFs and global passive funds. That trend has continued. In addition, May 2026 also saw some aggressive selling in debt index ETFs, which accounted for bulk of the selling in index ETFs and folio contraction. While the trend away from gold ETFs and index debt ETFs is quite apparent; the flows into equity index ETFs are relatively more circumspect. However, global funds are surely attracting a lot of passive attention!