Mutual Funds add 27.16 lakh folios in September 2026

Mutual Funds add 27.16 lakh folios in September 2026

TOTAL FOLIO ACCRETION GETS BETTER PROGRESSIVELY

Open ended funds added 27.16 lakh folios in September 2026; showing a steady improvement over the last few months. However, the folio accretion is still sharply lower compared to the 50-lakh folio accretion a month seen in January 2026. While fall in folio accretion can be attributed to uncertainty in markets, the pick-up in last 3 months is a positive signal. The retail investors who have not had a great experience handling the volatility of direct equities and derivatives; are now gravitating back towards mutual fund SIPs. Average size is also gradually rising.

While debt funds added 1.76 lakh folios, active equity funds added 17.70 lakh folios in the month of September 2026. Equity and debt fund folio accretion improved over last 2 months. Hybrid funds added 2.62 lakh folios in September, while passive funds added a sharply better 5.07 lakh folios. In terms of absolute accretion in passive funds, the dominant categories were equity ETFs, equity index funds, and Gold ETFs. In the active equity segment, folio accretion numbers were dominated by small cap funds, mid-cap funds, and flexi cap funds. Here are the top 5 in each category in terms of folio shift significance.

ACTIVE DEBT FUND FOLIOS: INTERESTING TRENDS EMERGE IN DEBT

For the month of September 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.

Data Source: AMFI

Out of the 17 categories of debt funds, 10 categories saw folio contraction, while 7 categories saw folio accretion. If you look at the top 5 active debt fund categories in terms of folio change in July 2026; Sectoral Debt Funds, Bank & PSU Funds, Liquid Funds, and Credit Risk 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 Banking & PSU funds can be attributed to a preference for banking and PSU debt, which are likely to be less vulnerable to a spike in interest rates. RBI looks set to take up one more rate hike in December. That also explains why the folios of Long-Term Funds have seen a sharp contraction in folios, as they are most vulnerable to a spike in yields.

EQUITY FUND FOLIOS - ALPHA IS STILL THE BIG STORY

For the month of September 2026, active equity funds added 17.70 lakh folios or 0.94% growth over the previous month. Here are the 5 most significant folio changes by category.

Data Source: AMFI

While the top-3 were dominated by Alpha hunting themes, the next 2 are allocation stories. Small Cap Funds, Mid-Cap funds and sectoral funds show focused bets on specific sectors or market cap groups. Flexi-cap and multi-cap funds are more of an allocation story, with different levels of discretion to the fund managers. In the last few months, it is alpha hunting that has dominated equity fund accretion to flows and to folios. This could be indicative of retail and HNI investors willing to take on more focused risks to compensate for the flat returns in the market indices. That is also evident in the falling interest in large cap and index stocks.

HYBRID FUNDS – LIFE CYCLE FUNDS MAKE BEST OF LOW BASE

For the month of September 2026, hybrid allocation funds added a total of 2.62 lakh folios or 0.98% over the previous month. Here are the 5 most significant folio changes by category.

Data Source: AMFI

In our definition of hybrid / solution funds we have included the traditional hybrid funds, solution funds, and life cycle funds. The folio accretion is most impressive in the recently introduced life-cycle funds; but that is more due to the low base. Even in the case of Balanced Arbitrage Funds, the reclassification appears to be helping in better focus. Also, arbitrage funds seems to be an increased preferred option for HNIs, due to its favourable tax treatment.

PASSIVE FUNDS WITNESS SLOWING FOLIO ACCRETION

For the month of September 2026, passive funds saw accretion of 5.08 lakh folios or 0.88% over the previous month. Here are the 5 most significant folio changes by category.

Data Source: AMFI

Out of the 11 categories of passive funds, 8 have shown positive folio accretion and 3 showed contraction in folios in September. Among the top 10 by significance of folio change, the only category to see folio contraction is debt index funds. In the case of hybrid ETFs and other ETFs, their presence can be attributed to the low base. Gold ETFs is an interesting story, seeing revival in retail interest with falling prices. Also, ETFs investing overseas are still seen as a good medium to diversify the portfolio globally.

The overall folio accretion continues to be healthy on a net basis. In the last few months, the SIP stoppage ratio has also been stabilizing, and that should help. Among debt funds, there are concerns of rising yields at the long end and falling yields at the short end. In equity funds, the trend is towards alpha hunting. It remains to be seen if alpha can deliver this time around!