Of the total Rs 2,67,500 crore that flowed into mutual funds in calendar year 2025, the concentration is striking: 25% of the inflows went into just six stocks, while 50% was deployed in just 19 names, according to a recent analysis by Elara Securities.
The top recipients of mutual fund investments are Infosys (5% of total inflows), Axis Bank (4%), Eternal Ltd (4%), State Bank of India (4%), Swiggy Ltd (4%) and Asian Paints (3%). These six stocks alone absorbed around Rs 67,000 crore of mutual fund money.
The next 25% of the inflows went to these 13 stocks: HDFC Bank, Vishal Mega Mart, RIL, HDB Financial Services, Dixon Tech, Kotak Mahindra Bank, Siemens Energy, TCS, Bajaj Finserv, Kaynes Tech, Varun Beverages, Tata Steel and Hexaware Tech.
Also read | Investment funds are delivering negative returns for the first time since 2018: should investors be cautious?
This concentrated effort comes at a challenging time for the sector. The AUM-weighted one-year rolling returns for Indian equity funds have turned negative since August 2025, which is the first time since 2018. The size of fund returns has also reached a post-COVID low, with the percentage of schemes delivering positive one-year returns falling sharply across all categories. Since September 2025, equity funds have been underperforming debt funds on a rolling one-year basis since February 2025, with the gap widening to 10% – the lowest equity premium since October 2020. The weakening return profile has led to a modest slowdown in active equity inflows over the past two months. Inflows fell 28%, from Rs 43,350 crore in July 2025 to Rs 31,000 crore in September 2025. The sharpest deceleration was in thematic/sectoral funds and small cap categories.
While concentrated bets can boost returns during bull markets, they also increase portfolio risk. Because mutual funds collectively own significant portions of a small number of stocks, any adverse movement in these investments could have outsized impact on the overall performance of the portfolio.
Of the 1,100 stocks in mutual fund portfolios, only 55 stocks saw net sales of more than Rs 500 crore during this period. Meanwhile, Rs 8,000 crore of inflows remained in cash, indicating fund managers are becoming more cautious even as they aggressively deploy capital in select names.
The concentrated betting strategy reflects fund managers’ conviction in specific stocks and sectors, but also signals a limitation of investment opportunities in an increasingly challenging market environment. As equity returns continue to deteriorate and returns remain subdued, the sustainability of this strategy will be tested in the coming months.
Money crunch
Mutual funds have been witnessing a notable cash crunch in recent months, with total cash holdings falling from a peak of 6.8% in April 2025 to 5.4% in September 2025. This bet has been particularly aggressive among midcap funds, where cash levels fell sharply from 7.3% in May 2025 to 4.5%, amounting to a bet of almost INR 10,000 crore in only four months.
The most notable efforts came from fund houses like Motilal Oswal, ICICI Prudential and Mirae Asset, which led the charge in putting idle cash to work.
#stocks #account #lakh #crore #mutual #fund #inflows