Mutual Funds Add 15.82 Lakh Folios in October 2026

Mutual Funds add 15.82 lakh folios in October 2026

TOTAL FOLIO ACCRETION FALLS AS SIP STOPPAGE RATIO SURGES

Open ended funds added just 15.82 lakh folios in October, compared to 27.16 lakh folios in September 2026. This arrests the positive trend of the last few months. The folio accretion had touched a high of 50-lakhs in January 2026, and now it is nearly 70% lower. While fall in folio accretion can be attributed to uncertainty in markets, the month of October has also seen the SIP stoppage ratio spiking sharply to 116%. That has been a key factor in the net folio accretion falling so sharply. The folio contribution came entirely from lumpsum investments.

While debt funds added 1.72 lakh folios, active equity funds added 9.46 lakh folios in the month of October 2026. While debt fund folio accretion was at par with September, equity folio additions almost halved, hinting at retail investor caution amid volatility. Hybrid funds added 1.60 lakh folios in October, while passive funds added 3.04 lakh folios. Both these categories were 50% to 60% lower than previous month. Dominant categories in absolute folio accretion were equity small cap funds, mid-cap funds, liquid funds, flexi cap funds, equity index funds, and MAAFs Here are the top 5 in each category in terms of folio shift significance.

ACTIVE DEBT FUND FOLIOS: CREDIT RISK FUNDS ATTRACT ATTENTION

For the month of October 2026, active debt funds added a total of 1.76 lakh folios or 1.84% over the previous month. Here are the 5 most significant folio changes by category.

Out of the 17 categories of debt funds, 10 categories saw folio contraction, while 7 categories saw folio accretion in October. If you look at the top 5 active debt fund categories in terms of folio change in October 2026; Sectoral Debt Funds, Credit Risk Funds, Liquid Funds, and Overnight Funds were positive, while Long-Term Funds were on the negative side. The rise in folios in sectoral debt funds can be attributed to the low base and may not be too indicative.

The preference for Credit Risk funds is driven more by the higher yields earned on these funds and is driving retail and HNI investors towards them, for yield alpha. With one more rate hike likely in December; it explains why investors are going slow on long-term funds and aggressive on credit risk funds, where yields tend to move up slower with rising rates.

EQUITY FUND FOLIOS – SMALL STOCKS STILL THE NAME OF THE GAME

For the month of October 2026, active equity funds added just 9.46 lakh folios or 0.50% growth over the previous month. Here are the 5 most significant folio changes by category.

This time 4 out of the top -5 were Alpha hunting themes, while only multi-cap funds were from the allocation theme. Small Cap Funds, Mid-Cap funds and sectoral funds show focused bets on specific market cap groups and sectoral preferences. The surge in folios of Contra Fund was more due to the Pru ICICI Contra Fund NFO, which accounted for bulk of folio accretion.

In the last few months, retail investors leaned towards alpha hunting that has dominated equity fund accretion in terms of flows and folios. Apparently, retail and HNI investors are willing to take on more focused risks to beat the flat returns in the market indices. Sectoral Funds have continued to attract interest, but Contra Fund may be more of a one-time story.

HYBRID FUNDS – SKEWED BY THE SHIFT OUT FROM CHILDREN’S FUNDS

For the month of October 2026, hybrid allocation funds added a total of 1.60 lakh folios or 0.59% over the previous month. Here are the 5 most significant folio changes by category.

Let us spend a moment on the massive folio flow from Children’s Funds to Balanced Hybrid Funds. Earlier this year, SEBI had launched life cycle funds to replace Solution Funds like Retirement Funds and Children’s Funds. It asked funds to discontinue Children’s Funds and reclassify them based on asset mix. Most of them fit into Balanced Hybrid Schemes. That explains the massive migration of folios from Children’s Funds to Balanced Hybrid Funds.

Life Cycle Funds of 30-year maturity and 15-year maturity were in the top-5 based on folio accretion. Once again, these are based on a low base, so the numbers are not too reflective of the actual picture. However, the good part of the story is that the interest in these life cycle funds with fixed maturity is increasing. It is also more transparent compared to the asset mix of children’s funds and retirement funds. Arbitrage Funds found its way to the top-5 hybrid funds as the rebound of flows into liquid debt funds was matched by arbitrage fund inflows.

PASSIVE FUNDS WITNESS SLOWING FOLIO ACCRETION

For the month of October 2026, passive funds saw accretion of 3.04 lakh folios or 0.52% over the previous month. Here are the 5 most significant folio changes by category.

Out of the 11 categories of passive funds, 8 have shown positive folio accretion and 3 showed contraction in folios in October. Among the top 10 by significance of folio change, there were 2 cases of contraction and 3 cases of folio expansion. Debt Funds continue to see concentration in folios as investors remain wary of long-term debt amidst rising rate risks. The other ETF folios have been reclassified as hybrid ETFs or ETFs investing overseas. On the positive side, the spike in hybrid folios was more on a small base.

With a sharp rise in the SIP stoppage ratio in October 2026, the folio accretion was sharply lower than in September. Some of the newer category introductions, across the board, appear to be attracting investor interest. The rise in folios of credit risk funds is a sign of caution. Investors must be wary of the risks in such funds, as seen in the past!