Large Cap’s five-year decline – a structural re-rating of where Indian investors want their money
Large Cap’s share of total equity AUM has fallen in a straight line – 18.2% (Mar-21) → 16.6% (Mar-22) → 15.5% (Mar-23) → 13.4% (Mar-24) → 12.2% (Mar-25) → 11.4% (Mar-26). In absolute rupees, Large Cap AUM grew from ₹1,78,324 Cr to ₹3,66,045 Cr, so money didn’t leave – it just barely doubled while total equity AUM more than tripled (₹9,79,367 Cr to ₹31,97,698 Cr). Every other category’s share in the overall pie grew faster.
Agencies The ratio shift against Mid and Small Cap is the most striking way to visualise this. In March 2021, Mid Cap was just 0.65x the size of Large Cap, and Small Cap at a distant 0.39x. By March 2026, Mid Cap has crossed over at 1.14x Large Cap – bigger than Large Cap for the first time – and Small Cap has reached 0.91x, closing in fast. Year by year, this progression is relentless:
Agencies
Trend 2:
Sectoral/Thematic: Five years of dominance, one extraordinary year, and a sharp correction
Sectoral/Thematic AUM has grown nearly 5x from ₹98,080 Cr (Mar-21) to ₹4,77,309 Cr (Mar-26), with equity AUM share rising from 10.0% to 14.9% — a story of genuine secular growth. But the flow data tells a more nuanced story.
Agencies The annual flows: FY22: ₹27,128 Cr (16.5%) → FY23: ₹23,731 Cr (16.2%) → FY24: ₹46,138 Cr (25.1%) → FY25: ₹1,46,656 Cr (35.2%) → FY26: ₹29,975 Cr (8.6%). FY25 was the outlier — more than one rupee in every three going into equity mutual funds chose a sectoral or thematic fund. Three forces converged: India’s capex Supercycle gave credible narratives for infrastructure, defence and manufacturing launches; PSU re-rating attracted fresh money; and crucially, unlike most equity categories where SEBI permits only one scheme per fund house, there is no limit on sectoral and thematic fund launches.
FY26’s pullback to 8.6% of flows is the market’s verdict. Defence, PSU and manufacturing themes underperformed as valuations stretched and earnings upcycles disappointed. Redemptions followed losses. FY25 was a powerful reminder that NFO-driven surges built on narratives and not on earnings do reverse.
Trend 3: Multi Asset Allocation Funds (MAAFs): From niche to essential, fuelled by gold and silver’s historic run
Multi Asset Allocation Fund (MAAFs) has been the single biggest structural winner in the entire hybrid segment over five years: from ₹14,795 Cr (Mar-21) to ₹26,591 Cr (Mar-23), and then an explosion to ₹1,73,762 Cr by Mar-26. Its share of hybrid AUM has surged from 4.1% (Mar-21) to 16.8% (Mar-26) — the largest positive shift of any hybrid sub-category. Net inflows tell the same story: FY22: ₹1,498 Cr → FY23: ₹6,070 Cr → FY24: ₹33
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