Investors Shift to Large-Cap Funds as Market Volatility Rises

Swift Summary

• mutual fund inflows in India fell by 22% in August 2025.
• Sectoral and thematic funds, which had attracted significant investments over the past year, are now losing their appeal.
• Large-cap funds, known for investing in established blue-chip companies and considered safer during market volatility, are regaining interest among investors.

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indian Opinion Analysis
The shift from sectoral and thematic funds to large-cap funds reflects evolving investor sentiment amidst market instability. Historically favored for their potential high returns, sector-specific funds appear less attractive as global uncertainties deepen financial markets’ unpredictability. This reorientation toward large-cap mutual funds signals a preference for stability over higher but riskier returns. For India’s asset management industry, this may underscore the importance of diversifying fund offerings to balance investor preferences against shifting economic conditions-a key consideration for long-term portfolio resilience amidst macroeconomic fluctuations.