NFO flows hit a 5-year low in June quarter, SIPs stay robust

ET Intelligence Group: Funds raised by asset management companies (AMCs) through new fund offers (NFOs) continued their year-on-year slide in the June 2026 quarter for the sixth consecutive period to reach a five year low of ₹1,759 crore. NFO collections fell 73% from the year-ago level of ₹6,506 crore, according to data from the Association of Mutual Funds in India (AMFI). On a sequential basis, too, they fell for the third consecutive quarter, this time by a sharp 83.5% from the prior quarter's collection of ₹10,661 crore.

The sharp slowdown followed weak sentiments in the equity market during the preceding quarter. The BSE Sensex had fallen nearly 16% to 71,947 by the end of March, amid escalating geo-political tensions in West Asia. Retail investors often take cues from recent market performance while making investments. Although market sentiment improved in the June quarter, with the Sensex rising nearly 5% to 76,479 by the end of June, the recovery did little to revive NFO fundraising.

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"NFO activity is closely linked to market sentiment and performance. During rising markets, positive returns tend to improve investor confidence, encouraging AMCs to launch more new schemes and attracting greater retail participation," Rishi Kohli, chief investment officer, Jio BlackRock Asset Management told ET, adding that the impact of market conditions is not uniform across all NFOs. Schemes launched by established AMCs and managed by fund managers with a proven track record, or NFOs offering product differentiation can continue to attract investor interest even during volatile periods.

Passive funds dominated new launches in the June 2026 quarter. Of the 31 NFOs launched by AMCs, 26 were index funds and ETFs, which collectively mobilised Rs 1,024 crore.

AMFI data indicates that the first quarter of a financial year has historically been a weak period for NFO mobilisation compared with the rest of the year. SIP inflow, on the other hand, has remained largely unfazed by stock market volatility, reaching Rs 31,115 crore in April, Rs 30,954 crore in May and Rs 31,781 crore in June.

“The headline strength in SIP inflow is driven largely by contributions from new mutual fund investors,” Swarup Mohanty, CEO of Mirae Asset Investment Managers told ET citing that a section of existing investors, however, has either paused or reduced investments amid heightened market volatility.

Mohanty expects SIP inflow to strengthen further from the current `25,000-30,000 crore monthly range, eventually reaching `40,000 crore a month over the next two years.