India MF Accounts Hit 27.86 Cr, Flexi-Cap Funds Surge 24%

India’s mutual fund industry expanded significantly by June 2026, with total investor accounts reaching 27.86 crore. This growth included the addition of approximately 20.31 lakh new folios during June alone, highlighting a sustained shift towards market-linked savings instruments.

Folio Growth Across Categories

Flexi-cap funds led the expansion, registering a 24.3% year-on-year increase in folios. These funds, offering managers flexibility across market capitalizations, now hold a total of 2.42 crore folios, appealing to investors seeking diversified exposure.

Sectoral and thematic funds remain the largest equity category by account count, holding 3.25 crore folios. This segment represents 15.3% of all retail equity-oriented folios, though its growth rate has moderated compared to broader equity funds.

June Retail Inflow Dynamics

Retail inflows into equity-oriented schemes reached Rs 28,973 crore in June. A significant portion of this capital flowed into specific strategies, demonstrating investor preferences.

Mid-cap funds attracted the highest net inflows at Rs 6,090 crore. Small-cap funds followed with Rs 5,602 crore, while flexi-cap funds secured Rs 5,231 crore in capital deployment.

ELSS Decline and Tax Regime Impact

A notable contraction occurred in Equity-Linked Savings Schemes (ELSS), which saw a 3.5% decrease in folios year-on-year. This decline is directly linked to the increasing adoption of India’s new tax regime, which offers no specific tax benefits for these investments.

The trend suggests a shift in investor focus towards long-term wealth creation, moving away from strategies primarily driven by short-term tax planning. The industry will closely monitor whether the momentum in mid and small-cap inflows persists amidst potential market volatility, and how fund houses adapt their product offerings to the evolving tax landscape.