Mutual funds added 76,500 folios in passive funds in Q1FY27, the lowest since the Association of Mutual Funds in India (Amfi) began making folio data public in April 2019. Folio additions plunged 99% from about 6.9 million in the previous quarter. This comes at a time, when the overall folio count of the industry reached an all-time high of 57.19 million in June 2026.

In comparison, active equity funds added 3.13 million folios during the quarter, while hybrid schemes added about 784,000. Even debt schemes, considered less popular among modern investors, added about 666,000 folios.

Sandeep Tandon, CIO and money manager, Quant Mutual Fund, attributed the decline in gold and silver ETF folios to falling prices, which resulted in losses for investors who entered the market near the peak of the rally.

“The improving geopolitical situation in May and June led to increased investor interest in equity, while more conservative investors allocated to hybrid schemes,” added Alok Singh, CIO, Bank of India Mutual Fund.

The sharp decline in passive-fund folio additions came after a record 6.9 million additions in Q4FY26, driven largely by strong investor participation in gold and silver ETFs. Gold and silver ETFs added 2.172 million and 2.342 million folios, respectively, during the quarter.

In Q1FY27, however, gold ETFs added only 78,227 folios, while silver ETFs saw their folio count decline by about 162,000. Debt-oriented ETFs also recorded a decline of nearly 944,000 folios.

Singh said gold and silver do not generate cash flows and are driven by relative valuations. “Their attractiveness deteriorates when the US dollar performs well, leading to lower inflows into gold and silver, which investors often use as a hedge against dollar depreciation,” he said.

Despite the decline in commodity-linked schemes, equity-oriented domestic index funds and equity-oriented domestic ETFs continued to attract investors in Q1FY27, adding nearly 456,000 and 340,000 folios, respectively. International ETFs and overseas fund of funds (FoFs) investing in active funds also recorded growth in folio counts.

Singh said the selective performance of mid- and small-cap stocks during the quarter made bottom-up stock selection more important, prompting investors to favour active equity schemes over passive funds.

Tandon said the relatively weaker performance of passive schemes compared with active funds had also contributed to a global shift in investor preference towards active strategies in recent months.

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