AMFI March 2026 Data: MF AUM Slips to Rs 73.73 Lakh Crore on Mark-to-Market Losses, Flexi-Cap Still Leads Inflows

The Association of Mutual Funds in India (AMFI) monthly note for March 2026 landed with a headline that looks alarming until you read the second line: industry assets under management (AUM) slipped to Rs 73.73 lakh crore, a 10.1% fall from Rs 82.03 lakh crore in February 2026. Yet the same month recorded a net equity inflow of Rs 40,450 crore — the 61st straight positive month — and flexi-cap funds led the category table for the eighth consecutive month with Rs 10,054 crore of net buying. The AUM drop was almost entirely mark-to-market: the Nifty 50 fell 11.3% and the Sensex 11.5% over the month, per the AMFI monthly note (amfiindia.com). Investors did not flee; prices did.

That split — falling asset values but rising systematic buying — is exactly the moment when investors re-open the oldest live debate in Indian equity allocation: should fresh money go into a flexi-cap fund or a multi-cap fund? Both categories buy across large, mid and small companies. Both are dominated by the same fund houses. But they answer to different SEBI mandates, and in a month where mid- and small-caps fell harder than large-caps, the structural difference between them stopped being academic. This pulse breaks down the March 2026 data, then puts flexi-cap and multi-cap side by side for the goal that matters to most readers: a 7-to-10-year equity SIP that survives drawdowns like this one.

Side-by-Side Comparison

Start with what March 2026 actually recorded. The AUM figure fell, but the flow figure rose, and the folio count rose sharply — 33.63 lakh net new folios in a single month, taking the industry total to 27.39 crore folios, per AMFI. Debt AUM told the opposite story, dropping about 15% month-on-month to Rs 16.52 lakh crore, but that was a mechanical advance-tax effect: the fourth advance-tax instalment for FY 2025-26 fell due on 15 March 2026, and corporates routinely redeem liquid and money-market funds to fund it. None of the debt drop reflected equity sentiment.

Here is the March 2026 snapshot in one place, all figures from the AMFI monthly note:

Now the structural comparison. The reason flexi-cap keeps topping the flow charts is partly that it is the least-constrained equity category SEBI allows. Under SEBI's scheme-categorisation framework, a flexi-cap fund must hold a minimum 65% of assets in equity and can allocate that freely across large-cap, mid-cap and small-cap stocks with no floor in any segment (sebi.gov.in). A multi-cap fund, by contrast, must hold a minimum 75% in equity and — critically — at least 25% each in large-cap, mid-cap and small-cap stocks at all times. That 25% mid- and small-cap floor is the entire difference between the two categories.

In a month like March 2026, that floor cuts both ways. Because the Nifty 50 fell 11.3% while broader mid- and small-cap indices historically fall further in such episodes, a multi-cap fund's mandatory 25%-plus in mid- and small-caps would have dragged harder on the way down. A flexi-cap manager was free to have already rotated toward large-caps and cash-equivalent cushions before the fall. The trade-off is symmetric: when the recovery comes, the multi-cap's forced small-cap exposure can rebound faster. Neither structure is "safer" in the abstract; they simply distribute risk differently, and the expense ratio you pay is broadly comparable across both.

One number that matters for both categories: March 2026 was the 61st consecutive month of net equity inflows, per AMFI. That streak began in March 2021, which means an entire cohort of investors has now run monthly SIPs through the 2022 rate-hike drawdown, the 2024 election-week volatility and now the March 2026 correction without stopping. The rupee-cost-averaging that a falling market delivers is the mechanical reward for not stopping — a Rs 20,000 monthly SIP bought roughly 11% more units in March than in February at the index level.

Tax Treatment

Here is where flexi-cap and multi-cap are identical, and it is the single most important thing to understand before choosing between them: both are equity-oriented mutual funds for tax purposes, because both hold well above the 65% domestic-equity threshold that Section 112A of the Income-tax Act uses to define an equity fund (incometax.gov.in). So the tax outcome does not depend on which category you pick — it depends only on how long you hold and how much you gain.

Following the Budget 2024 changes effective 23 July 2024, the rules for equity funds are:

Two points investors miss. First, the Rs 1.25 lakh long-term exemption is an annual aggregate across all your equity funds and listed shares combined — not per fund — so switching between a flexi-cap and a multi-cap scheme mid-way can trigger a taxable redemption that eats into that single yearly allowance (Section 112A, incometax.gov.in). Second, there is no indexation on equity LTCG; the 12.5% applies to the full nominal gain above Rs 1.25 lakh. A cess of 4% applies on the tax computed, per Oquilia's central rate configuration.

For most SIP investors the practical implication is simple: a March 2026 drawdown creates no tax event unless you sell. If anything, it is an opportunity for deliberate tax-loss harvesting on short-term lots, because a short-term capital loss can be set off and carried forward for eight assessment years under the Income-tax Act loss-set-off rules. But churning purely to book losses risks breaking the compounding that the 61-month inflow streak has rewarded.

A note on where equity funds sit in your wider tax picture. Under the new tax regime for FY 2025-26, the Section 87A rebate now shelters resident individuals with total income up to Rs 12 lakh, with a maximum rebate of Rs 60,000, and the standard deduction for salaried taxpayers is Rs 75,000. Capital gains taxed under Sections 111A and 112A do not qualify for the 87A rebate, so a large equity redemption is taxed at the flat 20% or 12.5% regardless of your slab — another reason to stagger redemptions across financial years rather than exit a flexi-cap or multi-cap position in one lump.

Who Should Pick Which

The AMFI flow data tells you what the crowd is doing; it does not tell you what fits your profile. Match the structure to the investor.

Pick a flexi-cap fund if you want a single, hands-off equity holding and you trust the manager to decide the cap mix. This suits a first-time investor consolidating a lumpsum or a busy professional running one core SIP who does not want to think about large-versus-small-cap rotation. Flexi-cap's Rs 10,054 crore of March 2026 inflows — the eighth straight month as category leader per AMFI — reflect exactly this "one fund, let the manager drive" preference. The risk you accept is manager risk: if the manager mistimes the rotation, you have no structural floor protecting your mid- and small-cap participation.

Pick a multi-cap fund if you specifically want guaranteed mid- and small-cap exposure and you have the risk appetite and time horizon (ideally 8 years-plus) to sit through the deeper drawdowns that the mandatory 25%-plus small-cap floor can produce. A multi-cap enforces the diversification a flexi-cap only promises. In a recovery after a correction like March 2026's 11.3% Nifty fall, that forced small-cap allocation is the part of the portfolio that can compound hardest — but only for investors who will not panic-sell when it falls first.

Pick neither in isolation if your goal is tax-linked. Investors chasing the Section 80C deduction under the old regime should look at an ELSS fund instead: it also invests across market caps but carries a three-year statutory lock-in and qualifies for the Rs 1.5 lakh deduction that flexi-cap and multi-cap funds do not. Note the 80C route is only available in the old tax regime; new-regime taxpayers get no deduction for any of these three, so the choice reverts to pure allocation strategy.

For a concrete rule of thumb grounded in the March data: if the 11.3% Nifty fall made you check your portfolio value more than once a day, your temperament fits a flexi-cap's manager-managed risk better than a multi-cap's hard-coded small-cap floor. If it made you want to buy more small-caps on the dip, a multi-cap institutionalises that instinct so you do not have to time it yourself.

FAQ

Why did mutual fund AUM fall in March 2026 if inflows were positive?

Because AUM is the market value of all holdings, not a record of buying and selling. The Rs 73.73 lakh crore figure fell 10.1% from February's Rs 82.03 lakh crore almost entirely because the Nifty 50 dropped 11.3% and the Sensex 11.5% over the month (AMFI monthly note). Investors actually added a net Rs 40,450 crore to equity funds — the 61st straight positive month — so the fall was mark-to-market, not redemptions.

Is a flexi-cap or a multi-cap fund riskier?

They distribute risk differently rather than one being simply riskier. A multi-cap fund must hold at least 25% each in large-, mid- and small-cap stocks, so it always carries meaningful small-cap risk (sebi.gov.in). A flexi-cap needs only 65% in equity with no cap-wise floor, so its risk depends on the manager's chosen allocation at any time. In sharp falls, the multi-cap's forced small-cap slice usually hurts more; in recoveries, it can help more.

Are flexi-cap and multi-cap funds taxed differently?

No. Both hold well above 65% in domestic equity, so both are equity funds under Section 112A of the Income-tax Act (incometax.gov.in). Gains held over 12 months are LTCG taxed at 12.5% above a Rs 1.25 lakh annual exemption; gains held 12 months or less are STCG taxed at 20%, following the rates effective from 23 July 2024. The category you pick does not change the tax.

Should I stop my SIP after an 11% market fall?

Stopping converts a paper decline into a permanent one and forfeits the rupee-cost-averaging benefit. At the index level, a fixed Rs 20,000 SIP bought roughly 11% more units in March 2026 than in February because prices fell. The 61-month inflow streak recorded by AMFI exists precisely because a large cohort of investors kept buying through prior drawdowns. Use our SIP calculator to model how continued instalments through a dip affect your corpus.

What is the minimum equity a multi-cap fund must hold?

75% of assets, with at least 25% each in large-cap, mid-cap and small-cap stocks at all times, under SEBI's scheme-categorisation framework (sebi.gov.in). A flexi-cap fund's minimum is lower — 65% in equity — with no per-segment floor, which is the defining structural difference between the two categories.

Does the Section 87A rebate cover my mutual fund capital gains?

No. Under the new regime for FY 2025-26 the Section 87A rebate goes up to Rs 60,000 for total income up to Rs 12 lakh, but capital gains taxed under Sections 111A and 112A are excluded from the rebate (incometax.gov.in). Equity fund gains are therefore taxed at the flat 20% or 12.5% regardless of your slab, which is why staggering large redemptions across financial years is worth planning.

How many new investors joined mutual funds in March 2026?

The industry added 33.63 lakh net new folios in March 2026, taking the total to 27.39 crore folios, per the AMFI monthly note. A folio is not a unique person — one investor can hold several — but the sharp net addition in a falling month signals that new money kept entering rather than exiting during the correction.