MF Sectoral Allocation December 2025: BFSI, Retail, Telecom & Autos Lead

Mutual fund sectoral allocation data offers a deeper view into how professional money managers are positioning portfolios. Unlike short-term market moves, sectoral AUM trends reflect conviction built over time.

As of the end of December 2025, Indian mutual funds reported total equity AUM of ₹51.08 trillion. This includes active equity funds, index funds, and the equity component of hybrid schemes. A comparison with December 2024 shows how sector preferences have evolved over the past year.

To make this comparison meaningful, sectoral changes are analysed on two dimensions:

• Absolute change in AUM (₹ crore), which captures scale and investor importance
• Percentage change in AUM, which helps assess momentum, especially for smaller sectors

An average rank across both parameters is used to arrive at a balanced view of sectoral preference.

MF Sectoral Mix: December 2025 Snapshot

The table below captures the top sectors by mutual fund AUM as of December 2025, along with their year-on-year change.

*Data Source: AMFI, Mutual Fund Monthly Factsheets (₹ in crore)

What the Table Clearly Shows

A few clear patterns emerge from the data.

• BFSI dominates MF portfolios by a wide margin, accounting for over ₹15 trillion of equity AUM
• Retail, Telecom, and Autos feature consistently among the top-ranked sectors
• Several smaller sectors show high percentage growth but remain modest in absolute size

This tells us that mutual funds are not just chasing momentum. They are allocating meaningfully to sectors where earnings visibility and domestic demand are stronger.

The Three Segments in the December Sectoral Shift

Based on rupee accretion, percentage growth, and average ranking, sectors broadly fall into three segments.

1. Most Preferred Sectors

These sectors have seen strong growth both in absolute AUM and percentage terms:

• Banking & Finance
• Retail
• Telecom
• Auto & Ancillaries

These sectors reflect sustained and long-term MF conviction.

2. Momentum-Driven or Selective Allocation Sectors

These sectors have delivered strong percentage growth but from a smaller base:

• Aviation
• Metals & Mining
• Diamond & Jewellery
• Chemicals & Fertilisers

Here, mutual fund exposure appears more tactical than core.

3. Sectors Facing Relative Challenges

These sectors show weaker rankings and slower MF accumulation:

• FMCG
• Pharmaceuticals
• Capital Goods
• Power

While still large parts of the economy, these sectors are currently facing demand, regulatory, or global headwinds.

The Story Behind Key Sectoral Exposures

The numbers reflect distinct sector-specific narratives.

• BFSI remains the biggest MF bet due to its domestic nature. Strong credit growth, improving asset quality, and steady NBFC participation have supported consistent allocations.
• Retail growth is increasingly digital-led. Beyond traditional retail, platform businesses such as Zomato, Swiggy, and recently listed digital-first brands have driven sector expansion.
• Telecom and Autos are benefiting from regulation and policy support. Higher ARPUs, AGR relief for telecom players, GST-related support for autos, festive demand, and easing interest rates have improved outlook.
• Metals, Aviation, Jewellery, and Chemicals have largely seen MF interest driven by market momentum rather than long-term allocation shifts.

Which Heavyweight Sectors Are Missing and Why

A notable absence from the top-ranked sectors is IT Services. Despite being a large index constituent, weak global tech spending, visa-related uncertainties, and cautious enterprise budgets have weighed on MF allocations.

Even within the top 15:

• FMCG has struggled due to weak urban demand
• Pharmaceuticals face uncertainty around potential US export restrictions
• Power has seen demand moderation after the summer peak

These factors explain the relatively lower MF preference.

What Mutual Fund Positioning Is Signalling

The December 2025 sectoral mix points to a clear investment stance.

Mutual funds are:

• Tilting portfolios toward domestic demand-driven sectors
• Reducing exposure to sectors dependent on global cycles
• Prioritising earnings visibility and regulatory stability

It is also noteworthy that healthcare ranks among the top four sectors by MF AUM, alongside BFSI, autos, and IT services. Even here, the emphasis is on domestic consumption rather than export dependence.

Key Takeaways

• Total MF equity AUM stood at ₹51.08 trillion in December 2025
• BFSI continues to be the most preferred MF sector by a wide margin
• Retail, telecom, and autos reflect strong domestic demand bias
• High percentage growth in sectors like aviation and metals is momentum-led
• FMCG, pharma, and capital goods face sector-specific challenges
• Overall MF positioning remains focused on domestic visibility and stability

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 mutual fund schemes. Mutual fund investments are subject to market risks. Please read all scheme-related documents carefully and consider consulting a qualified professional before taking any financial decision.