Mutual Funds Back Retail, Chemicals, and Pharma in June 2025

Data Source: AMFI and Mutual Fund Websites (Rankings in absolute) | Period: June 2025

Indian mutual funds made decisive sectoral allocations in June 2025, reflecting a clear tilt toward domestic consumption themes and global supply chain repositioning. Retail, chemicals, and pharmaceuticals led the sectoral preference rankings based on both absolute AUM growth and percentage gains.

Let’s break down the key highlights from the data and what it tells us about mutual fund sector strategy.

Equity AUM Growth: Strong Momentum Across the Board

The total mutual fund equity AUM including active equity, hybrid, and passive equity exposure - stood at ₹47.11 trillion at the end of June 2025. This marks a sharp rise from ₹41.11 trillion in March 2025 and ₹38.67 trillion in June 2024.

• Equity AUM Growth YoY (June 2024 to June 2025): ₹8.43 trillion added, or 21.81% increase

This growth in AUM is partly due to rising stock prices (price accretion) and partly due to active allocation decisions by mutual fund managers. While price effects distort pure buying trends, the data still reveals a pattern of sectoral preference when ranked by average of absolute and percentage AUM shift.

Top 5 Most Preferred Sectors - June 2025

These sectors ranked highest when considering both value accretion and relative momentum. The top 5 sectors, while accounting for 45.2% of total equity AUM, contributed a massive 62.8% of the AUM growth - highlighting concentrated fund manager conviction.

1. Retail

• AUM: ₹1.73 trillion
• YoY Growth: ₹81,805 crore (89.49%)
• Average Rank: 2.5
• Drivers: Mutual funds increased positions in digital-first retail plays like Eternal and Swiggy, betting on India’s growing consumer tech ecosystem.

2. Chemicals & Fertilizers

• AUM: ₹1.45 trillion
• YoY Growth: ₹45,456 crore (45.61%)
• Average Rank: 5.5
• Drivers: Positioned to benefit from the China+1 strategy and global realignment of chemical supply chains.

3. Pharmaceuticals

• AUM: ₹3.89 trillion
• YoY Growth: ₹91,454 crore (30.64%)
• Average Rank: 5.5
• Drivers: Despite concerns over US tariffs, Indian pharma is seen as a defensive sector catering to affordable global healthcare.

4. Banking & Finance (BFSI)

• AUM: ₹13.82 trillion
• YoY Growth: ₹2.92 trillion (26.82%)
• Average Rank: 5.5
• Drivers: A mix of valuation comfort, credit cycle recovery, and re-allocation into domestic NBFCs and banks, especially as index weights had dropped earlier.

5. Aviation

• AUM: ₹38,854 crore
• YoY Growth: ₹18,264 crore (88.70%)
• Average Rank: 7.0
• Drivers: Rising interest in aviation stocks like Indigo, backed by its industry leadership, and SpiceJet gaining on legal tailwinds.

What the Broader Theme Suggests

• Domestic Consumption-Focused: The bulk of AUM growth came from sectors tied to Indian consumption - retail, BFSI, aviation, and pharma.
• Supply Chain Realignment: Chemicals & fertilizers surged in preference as funds bet on India's increased role in global manufacturing.
• Concentrated Growth: Although mutual funds spread AUM across ~30 sectors, just 5 accounted for more than 60% of the growth, showing high conviction bets.

Conclusion: Where Mutual Fund Money Is Flowing

The June 2025 mutual fund sectoral data shows a clear trend: fund managers are rotating capital into domestic stories and global defensives. Retail and aviation play into the consumption revival theme. Pharma and chemicals hedge against global uncertainty. BFSI continues to offer both valuation comfort and long-term structural growth.

For investors, these trends offer insights into institutional sentiment - and potentially early signals of long-term investment narratives taking shape in India’s equity markets.

Disclaimer: The information presented in this article is for informational purposes only and is not intended as investment advice. Mutual fund investments are subject to market risks; please read all scheme-related documents carefully before investing.