Price Accretion Drives 83% of Equity AUM Growth in June 2025

Data Source: AMFI India | Period: June 2025

Indian equity mutual funds witnessed strong AUM (Assets Under Management) growth in June 2025. But once again, it wasn’t driven by fresh inflows. Instead, price accretion - the rise in market value of existing holdings - was the dominant contributor.

This marks the third consecutive month where market performance, not money flow, led to higher AUM. Let’s break down the numbers and what they mean for investors.

What Is Price Accretion in Mutual Fund AUM?

When mutual funds hold equities and the stock prices rise, the value of the fund’s portfolio increases - this is called price accretion. It adds to the fund’s total AUM, regardless of whether there are any new investor inflows.

So even if investors aren’t pumping in fresh capital, a strong market rally can push AUM up via price gains alone.

AUM Breakdown for June 2025: ₹1.41 Trillion Added

According to AMFI, equity funds saw an overall AUM accretion of ₹1.41 trillion in June 2025. Here’s how that breaks down:

• ₹1.18 trillion (83%) came from price accretion
• Only ₹0.23 trillion (17%) came from net inflows (new investments)

This highlights that June’s equity fund AUM growth was primarily led by market recovery, not investor activity.

Equity Funds Classified by Price Dominance

The funds have been classified into three categories based on how much of their AUM growth was due to price accretion.

Category 1: Price Dominance > 90%

These funds saw AUM growth almost entirely due to price movement. Notably, many of them had low or negative net inflows, which magnified price dominance.

• ELSS continues to suffer due to the New Tax Regime (NTR) reducing demand for tax-saving funds.
• Sectoral funds are trending due to thematic bets but attract limited SIP flows.
• Dividend yield funds aren’t popular in momentum markets.

Category 2: Price Dominance ~80%–89%

These funds experienced significant price-led growth despite moderate inflows.

• Large cap funds saw inflows but are losing preference due to limited upside in benchmark-heavy portfolios.
• Focused and value funds remain niche, with lower popularity.
• Mid caps are holding ground but are slowly being overshadowed by small caps.

Category 3: Price Dominance < 80%

These funds saw strong investor flows, which reduced the share of price-led AUM growth.

• These are currently favored by investors through SIPs, NFOs, and lump sum investments.
• Flexi and multi-cap funds allow diversification across market caps, aligning well with current investor sentiment.
• Small cap funds continue to see strong momentum despite valuation concerns.

What the Macro Picture Tells Us

• Overall price dominance in June 2025 was 83.3%, slightly lower than 87.1% in May, indicating that investor flows improved slightly.
• However, price movements remain the core driver of AUM growth—a sign that market recovery, not fresh investments, is doing the heavy lifting.

What Should Investors Take Away?

1. Don’t confuse AUM growth with new money coming in. A high AUM number may just reflect market performance.
2. Understand the fund’s inflow profile. Funds with high price dominance but low inflows may not reflect investor confidence.
3. Watch trends like ELSS decline and flexi-cap rise. They offer clues into what investors are valuing - tax benefits vs. flexibility.
4. Look beyond category - analyze momentum vs fundamentals. Sectoral funds may look good now, but they carry higher risk.
5. Flows matter during market corrections, price matters in rallies. June was the latter. But when markets slow down, inflows will drive the story.

Final Word

In a rising market, price accretion boosts AUM, but it doesn’t always reflect growing investor conviction. For now, equity mutual funds are riding the wave of recovery but investors should look beneath the AUM surface to understand what’s truly fueling the growth.

Disclaimer: This article is for informational purposes only and does not constitute investment, tax, or legal advice. Please consult a SEBI-registered financial advisor before making any investment decisions.