Economy & Banking★ Must Know

Indian Mutual Funds Overtake FIIs in Total Assets for the First Time

By TestNeeti Editorial TeamPublished Wednesday, 8 July 2026 2 min readSource: The Economic TimesArticle 1 of 20

India's domestic mutual fund industry has overtaken foreign institutional investors (FIIs) in total assets under custody (AUC) for the first time ever, according to NSDL data as of June 2026. Mutual funds' total AUC across equity, debt and ETFs rose to ₹76.41 lakh crore, marginally ahead of FIIs' ₹76.22 lakh crore. The shift was driven by strong SIP (Systematic Investment Plan) inflows of over ₹30,000 crore a month and sustained domestic participation, even as FII holdings declined. Domestic mutual funds' market share hit an all-time high of 11.46% as of March 31, 2026 — an 11th straight quarter of gains — while the FII share fell to a 14-year low of 16.13%. In equities, however, FIIs still lead with ₹68.65 lakh crore against mutual funds' ₹54.5 lakh crore.

Key Facts & Details

9 points

1
Domestic mutual funds surpassed FIIs in total assets under custody for the first time, per NSDL data as of June 2026.
2
Mutual funds' total AUC reached ₹76.41 lakh crore, just ahead of FIIs' ₹76.22 lakh crore.
3
The milestone was driven by strong SIP inflows of over ₹30,000 crore per month and steady retail participation.
4
Domestic mutual funds' market share touched an all-time high of 11.46% (as of March 31, 2026), the 11th consecutive quarter of growth, while the FII share fell to a 14-year low of 16.13%.
5
In equity assets, FIIs still lead with ₹68.65 lakh crore against mutual funds' ₹54.5 lakh crore, which grew 23.3%.
6
FII equity holdings have fallen from a peak of around ₹78 lakh crore in September 2024.

Deep Dive

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The trend reflects the deepening of India's domestic investor base and the growing role of household savings routed through SIPs.
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Assets under custody (AUC) covers equity, debt and exchange-traded funds (ETFs) held on behalf of investors.
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Rising domestic ownership can cushion Indian markets against volatility caused by sudden foreign-capital outflows.

Exam Focus

As of June 2026, domestic mutual funds' total assets under custody (₹76.41 lakh crore) surpassed which category of investors for the first time?

Exam Relevance & Angle

This is a structural capital-markets milestone and a favourite banking/economy GA hook. Candidates should remember that domestic mutual funds overtook FIIs in total AUC (₹76.41 lakh crore vs ₹76.22 lakh crore) in June 2026, powered by SIP inflows, and that NSDL is the data source — details that anchor market-structure questions.

Target Exams

SBI POIBPS PORBI Grade BNABARD Grade AUPSC CSE

Background & Context

Foreign Institutional Investors (FIIs) — also called Foreign Portfolio Investors (FPIs) — are overseas entities that invest in Indian stocks and bonds, and have historically been the dominant non-promoter force in Indian equities. Mutual funds pool money from domestic retail and institutional investors, with the Systematic Investment Plan (SIP) allowing regular fixed contributions that have become the backbone of Indian household equity investing. Assets under custody (AUC) is the market value of securities held on investors' behalf, tracked by depositories such as the National Securities Depository Limited (NSDL). A rising domestic share reduces the market's vulnerability to sudden foreign outflows and reflects growing financialisation of savings.