Which Equity Fund Categories Grew the Fastest Over 3 Years?

Written by Finnovate

Content Team

Equity mutual fund folios in India have grown at a CAGR of 22.96% over the last three years, while AUM has grown at 29.69%, according to AMFI data comparing May 2023 to May 2026. Both figures have roughly doubled in three years, even through a stretch marked by global geopolitical turmoil.

But the aggregate number hides a wide spread. Across the 11 equity fund categories tracked by AMFI, folio growth ranges from under 2% to over 40%, and the categories leading on investor count are not always the same ones leading on money.

This article ranks all 11 equity fund categories on a combined measure of folio growth and AUM growth, and looks at what the spread says about where retail money is actually going.

The 3-Year Equity Fund Category Scorecard

Which categories are leading the pack?

The four categories in the top bracket combine strong folio growth with strong AUM growth: Multi Cap, Sectoral/Thematic, Small Cap, and Mid Cap Fund. Three of these are what could be called alpha-seeking categories, while Multi Cap Fund is allocation-linked by mandate, requiring a minimum spread across large, mid, and small cap stocks.

Which categories are growing, but more modestly?

A second set of four categories sits in the middle: Large & Mid Cap Fund, Value/Contra Fund, Flexi Cap Fund, and Dividend Yield Fund. These categories are typically built around a specific investing style or mandate constraint rather than a single market-cap or sector bet, which may explain more measured folio growth even where AUM growth has kept pace.

Flexi Cap Fund is a useful example of this pattern. Its folio CAGR of 23.47% is middling relative to the top bracket, but it is the single largest category by AUM in 2026, at Rs 5,63,895.97 crore. That combination, moderate folio growth but the largest asset base, suggests Flexi Cap Fund draws large individual allocations rather than a proportionally larger number of new investors.

Dividend Yield Fund sits at the bottom of this middle group, with the slowest folio CAGR (17.29%) of the four, though its AUM CAGR of 27.20% is still stronger than every category in the bottom bracket.

Which categories have fallen out of favour?

Three categories show single-digit or near-single-digit folio growth over the three years: Large Cap Fund, Focused Fund, and ELSS.

Large Cap Fund's folio CAGR of 9.92% is the weakest among the three, and it has slipped in the AUM rankings too, falling from the second-largest equity category by AUM in 2023 to fifth-largest in 2026. Focused Fund's folio CAGR of just 1.78% is the lowest of all 11 categories, though its AUM CAGR of 17.87% is still meaningfully positive, again pointing to concentration of AUM among fewer, larger investors rather than a widening retail base.

ELSS folio CAGR sits at 2.25%, the second-lowest in the data set. ELSS's tax-saving appeal under Section 80C is only available to taxpayers who opt for the old tax regime, and the growing shift toward the new tax regime over the last few years may be a contributing factor to its comparatively slower folio growth, alongside the category's mandatory three-year lock-in relative to the fully liquid categories in this data set.

What this means for investors

The spread in this data points to a broader pattern: retail investors have shown a stronger preference for alpha-seeking, less-constrained categories over the last three years than for large-cap or lock-in-linked categories, even in a volatile market environment. Sectoral and thematic fund allocation in particular has continued to draw sustained folio growth, not just a one-time spike.

At the same time, AUM growth has outpaced folio growth in nearly every category, which historically has meant that existing investors are adding more per account rather than the investor base multiplying at the same rate as the money. Whether that combination represents a healthy maturing of allocations or a concentration risk worth monitoring may be worth reviewing in the context of an individual's own portfolio construction and diversification across market-cap segments.

Key Takeaways

• Equity fund folios grew at a 3-year CAGR of 22.96% and AUM at 29.69%, with both figures roughly doubling since May 2023, per AMFI data.
• Multi Cap, Sectoral/Thematic, Small Cap, and Mid Cap Fund form the top bracket on combined folio and AUM growth, three alpha-seeking categories plus one allocation-mandated category.
• Flexi Cap Fund is the largest equity category by AUM in 2026 despite only middling folio growth, suggesting larger average allocations rather than a proportionally larger investor base.
• Large Cap Fund's folio CAGR of 9.92% is among the weakest in the data set, and the category has slipped from second to fifth in the AUM rankings since 2023.
• ELSS and Focused Fund show the slowest folio growth of all 11 categories, with ELSS's new-tax-regime dynamics and lock-in structure a likely contributing factor.
• AUM growth outpacing folio growth in most categories points to rising average allocation sizes among existing investors, a pattern that may be worth factoring into portfolio review.

FAQs

1. Which equity fund category grew the fastest over the last 3 years?

Multi Cap Fund, with a folio CAGR of 40.33% and an AUM CAGR of 46.53%, the highest of all 11 equity categories tracked by AMFI between May 2023 and May 2026.

2. Why has ELSS folio growth slowed down?

ELSS's Section 80C tax benefit is only available under the old tax regime, and its mandatory three-year lock-in is longer than most other equity categories, both of which may be contributing to its comparatively slow 2.25% folio CAGR.

3. Is Flexi Cap Fund still a popular category despite slower folio growth?

Yes. Flexi Cap Fund is the largest equity category by AUM in 2026, at over Rs 5.6 lakh crore, even though its folio CAGR of 23.47% is middling relative to the fastest-growing categories.

4. Why has Large Cap Fund fallen in the AUM rankings?

Large Cap Fund has gone from the second-largest equity category by AUM in 2023 to the fifth-largest in 2026, alongside the slowest folio CAGR among the three worst-performing categories, indicating a broader retail shift toward other equity categories over this period.

5. Does faster AUM growth than folio growth matter for individual investors?

It can signal that existing investors are increasing their allocation sizes rather than the investor base growing at the same pace. Please consult a SEBI-registered investment adviser to review how this pattern may apply to your own portfolio construction.

Disclaimer: This article is for general information and educational purposes only. It does not constitute investment advice, a recommendation, or an offer to buy or sell any securities or financial instruments. Folio and AUM data referenced in this article are sourced from AMFI and are based on publicly available figures as of the date of writing, subject to revision. Past AUM and folio growth patterns are not indicative of future outcomes. Please consult a SEBI-registered investment adviser or qualified financial professional before making any investment decision. Mutual fund investments are subject to market risks.