New Fund Outflows Moderate in 2026 Amid Shift to Strategic Investing

Mutual Fund NFO Activity Slows in 2026 Despite Strong Overall Inflows

New fund offer (NFO) activity in India has experienced a year-on-year decline in 2026, even as overall inflows into mutual funds and offers remain robust. According to data from the Association of Mutual Funds in India, 69 NFOs were launched in the first four months of 2026, compared with 77 in the same period last year.

The data also shows that as of March 2026, around Rs 10,650 crore has been raised through NFOs, compared with around Rs 13,000 crore collected across 77 funds during the January-April 2025 period.

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The monthly trends in NFO launches have remained uneven, with a sharp spike in March, coinciding with heightened market volatility. However, the market sentiment reversed in April, with benchmark indices gaining 7-8%, while midcap and smallcap indices rallied 13.8% and 18.6%, respectively. Despite the recovery, NFO activity cooled to 13 launches in April, indicating that issuance did not keep pace with the market rebound.

Fund houses have attributed the strategy-led approach to NFO launches, with limited impact from market movements. Edelweiss Mutual Fund, led by Niranjan Awasthi, focuses on launching strategies when there is a gap in offerings, valuations are reasonable or during periods of market correction, with an emphasis on investor needs and experience.

Similarly, Motilal Oswal's CBO Akhil Chaturvedi has stated that their launches are driven by their pipeline and long-term plans, not short-term market movements. He added that improving markets can support better outcomes for NFOs by allowing investments in more attractive opportunities.

Another category experiencing growth is Systematic Investment Plans (SIPs), with experts noting that it could be a focus for fund houses in the coming months. As of March 2026, the total number of SIP products was 14 with an AUM of Rs 10,000 crore. The month of April saw around 4 NFOs (2 NFOs closed, 2 ongoing) being launched in the space.

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