India's mutual fund AUM tops Rs 85 lakh crore: AMFI's July 2026 scale read and what is driving it
AMFI data puts Indian mutual fund AUM at Rs 85,75,657 crore on 31 July 2026 and Rs 87,07,888 crore on 31 August 2026. What SEBI's falling expense-ratio slabs mean for investors.
The Association of Mutual Funds in India (AMFI) put the industry's average assets under management (AAUM) for July 2026 at Rs 86,33,798 crore, and assets under management as on 31 July 2026 at Rs 85,75,657 crore. That is the reading which carried Indian mutual funds past the Rs 85 lakh crore mark. It has not stood still since: AMFI's next monthly update showed AUM of Rs 87,07,888 crore as on 31 August 2026 and AAUM of Rs 88,30,776 crore for the month of August 2026.
Milestones of this kind are usually reported and then left alone. This one is worth a second look, because Indian fund pricing is not a flat fee. It is a slab structure written into Regulation 66(7) of the Securities and Exchange Board of India (Mutual Funds) Regulations, 2026, which came into force on 1 April 2026. The maximum expense ratio a scheme may charge falls as its daily net assets rise. Industry growth, when it lands inside individual schemes rather than in new ones, mechanically lowers the ceiling on what those schemes are allowed to take from investors.
AMFI attributes the expansion to sustained systematic investment plan flows and mark-to-market gains on existing portfolios — two very different engines, one behavioural and one market-dependent. The participation base behind it is no longer narrow: the industry counted 28.35 crore folios (283.5 million accounts) as on 31 August 2026.
The longer arc explains why the slab structure now matters in a way it did not a decade ago. Industry AUM stood at Rs 15.63 trillion in August 2016 and Rs 36.59 trillion in August 2021, against Rs 87.08 trillion in August 2026 — roughly sixfold over ten years and roughly threefold over five. Individual schemes have grown alongside, and a large number of them now sit in asset bands where the permitted expense ratio is materially below the headline 2.10 per cent that applies to the first Rs 500 crore.
| AMFI industry figure | Value | As on / for |
|---|---|---|
| AUM | Rs 85,75,657 crore | 31 July 2026 |
| AAUM | Rs 86,33,798 crore | July 2026 |
| AUM | Rs 87,07,888 crore | 31 August 2026 |
| AAUM | Rs 88,30,776 crore | August 2026 |
| Folios | 28.35 crore | 31 August 2026 |
| AUM, five years earlier | Rs 36.59 trillion | August 2021 |
| AUM, ten years earlier | Rs 15.63 trillion | August 2016 |
Source: AMFI industry figures.
Side-by-Side Comparison
The practical question a scale read raises is a pricing one: for long-run equity exposure, does an investor get a cheaper certain outcome from a large actively managed open-ended equity scheme priced off the AUM slabs, or from an index fund or exchange traded fund priced off a single flat cap?
Regulation 66(7)(c) sets the slab ladder for open-ended schemes other than index funds, ETFs and funds of funds. Regulation 66(7)(b) sets a single ceiling of 0.90 per cent for an index fund scheme or an ETF, with no reference to size at all.
| Daily net assets slab | Maximum base expense ratio, equity oriented | Maximum base expense ratio, other than equity oriented |
|---|---|---|
| On the first Rs 500 crore | 2.10% | 1.85% |
| On the next Rs 250 crore | 1.90% | 1.65% |
| On the next Rs 1,250 crore | 1.60% | 1.40% |
| On the next Rs 3,000 crore | 1.50% | 1.25% |
| On the next Rs 5,000 crore | 1.40% | 1.15% |
| On the next Rs 40,000 crore | Reduction of 0.05% for every increase of Rs 5,000 crore of daily net assets or part thereof | Same taper |
| On the balance of the assets | 0.95% | 0.70% |
Source: Regulation 66(7)(c), SEBI (Mutual Funds) Regulations, 2026, in force 1 April 2026.
The slabs are marginal, not cliff-edged, so the rate a scheme actually charges is a blended figure. Applying the equity column arithmetically gives the maximum blended base expense ratio at each size, and the annual rupee cost of that ceiling on a Rs 10,00,000 holding.
| Scheme size (daily net assets) | Maximum blended base expense ratio | Annual cost on Rs 10,00,000 at that ceiling |
|---|---|---|
| Rs 500 crore | 2.10% | Rs 21,000 |
| Rs 1,000 crore | 1.93% | Rs 19,300 |
| Rs 5,000 crore | 1.61% | Rs 16,100 |
| Rs 10,000 crore | 1.50% | Rs 15,000 |
| Index fund or ETF, any size | 0.90% | Rs 9,000 |
Calculated from the Regulation 66(7) slabs. Figures are regulatory ceilings, not what any particular scheme charges.
Two features of the comparison matter more than the headline gap. First, the base expense ratio is not the whole bill. Regulation 67(1) defines total expense ratio as the base expense within the Regulation 66(7) limit, plus brokerage permitted under Regulation 66(9), plus transaction cost under Regulation 66(10), plus statutory levies charged to investors. Regulation 66(9) caps chargeable brokerage at 0.06 per cent of trade value for cash market transactions and 0.02 per cent for derivatives transactions; anything above that must be absorbed inside the base limit. Regulation 66(10) keeps exchange, clearing corporation and clearing house levies outside the base expense ratio altogether.
Second, the ceiling is a ceiling. A Rs 10,000 crore equity scheme may charge up to 1.50 per cent blended, but nothing in Regulation 66 obliges it to charge less than that as it grows. The regulation lowers the maximum; competition and the asset management company's own pricing decide the actual number, which is why the scheme's own disclosed expense ratio is the figure to check rather than the slab table.
| Feature | Large actively managed open-ended equity scheme | Index fund or ETF |
|---|---|---|
| Governing cap | Regulation 66(7)(c) slab ladder | Regulation 66(7)(b), flat 0.90% |
| Cost falls as the scheme grows | Yes, the permitted maximum tapers | No, the cap does not move with size |
| Ceiling at Rs 10,000 crore | 1.50% blended | 0.90% |
| Marginal rate above Rs 50,000 crore | 0.95% | 0.90% |
| Brokerage over and above base | Up to 0.06% cash, 0.02% derivatives (Reg 66(9)) | Same limits apply |
| Exit load ceiling | 3% of NAV (Reg 44(4)) | Same statutory ceiling; ETFs are bought and sold on exchange |
| Cost certainty for the investor | Depends on scheme size and the AMC's pricing | Fixed regulatory ceiling regardless of scale |
Note the convergence at the top of the ladder: a very large equity scheme's marginal rate on the balance of its assets is 0.95 per cent, only five basis points above the flat index fund and ETF cap of 0.90 per cent. Scale narrows the structural cost gap between active and passive pricing; it does not close it, and it does nothing to the blended average on the slabs below.
Tax Treatment
Expense ratios are netted into net asset value before returns are struck. An investor cannot claim the expense ratio as a deduction, and no part of the Income-tax Act 1961 treats a cheaper scheme differently from a costlier one. Tax attaches to the gain, not to how much was paid to produce it.
For units of an equity oriented mutual fund, the Income Tax Department's published position in its capital gains FAQs is that the holding period to be considered is 12 months rather than 36. Beyond 12 months, gains are long-term. Within 12 months, they are short-term.
| Gain on units of an equity oriented fund | Statutory provision | Rate | Threshold |
|---|---|---|---|
| Long-term capital gain (held over 12 months) | Section 112A | 12.5% | Exempt up to Rs 1,25,000 in a year; excess taxed |
| Short-term capital gain (held 12 months or less) | Section 111A | 20% | No threshold |
Rates apply to transfers taking place on or after 23 July 2024, and require securities transaction tax to have been paid on the transfer. Surcharge and cess apply on top: health and education cess is 4 per cent of tax plus surcharge, and surcharge in the new regime is capped at 25 per cent at the highest slab.
The consequence for a scale-driven comparison is blunt. If two schemes deliver the same gross return and one charges 1.50 per cent while the other charges 0.90 per cent, the cheaper scheme produces a larger gain, and that larger gain is taxed at exactly the same 12.5 per cent above the Rs 1,25,000 threshold. The cost saving survives tax in full; it is not clawed back by a higher rate.
One category-specific point is worth separating out, because it is regularly muddled. An equity linked savings scheme carries a Section 80C deduction, but that deduction is available only under the old tax regime. It is not available to a taxpayer who has opted for the new regime, and the ELSS calculator should be read with that in mind. The capital gains treatment of ELSS units on redemption is the same Section 112A treatment set out above.
Who Should Pick Which
Nothing here is a recommendation about any particular scheme, and the correct scheme for any individual depends on facts this article cannot see. What the regulation does allow is a clear reading of which cost structure suits which situation.
An investor whose entire equity allocation will realistically stay below the point where slab savings compound — a small monthly commitment through a systematic investment plan, say — is exposed to the top of the ladder, where the equity ceiling is 2.10 per cent on the first Rs 500 crore of the scheme's assets. The scheme's own size, not the investor's, decides this. Checking the disclosed expense ratio before committing is the single highest-value minute in the process, because a 1.20 percentage point difference on Rs 10,00,000 is Rs 12,000 every year.
An investor who wants cost certainty irrespective of how a scheme's assets move should note that the 0.90 per cent index fund and ETF cap under Regulation 66(7)(b) is the only ceiling in the structure that does not depend on scale. It cannot rise if the scheme shrinks, and it does not need the scheme to grow before it falls.
An investor deploying a one-time amount rather than a monthly flow faces the same slab arithmetic but a different exposure to the 3 per cent exit load ceiling under Regulation 44(4), since a single exit event carries the whole load rather than spreading it across tranches. The lumpsum calculator is the place to model that, and the load, not the expense ratio, is usually the larger number in the first year.
An investor comparing a market-linked scheme against an administered rate should keep the two conversations apart. The Public Provident Fund rate is 7.10 per cent for the July to September 2026 quarter, unchanged, and that figure is net of any charge — there is no expense ratio between the declared rate and the subscriber. A mutual fund expense ratio is a cost against an uncertain return, which is a different kind of comparison entirely, not a better or worse version of the same one.
FAQ
Does a bigger scheme automatically charge a lower expense ratio?
No. Regulation 66(7)(c) of the SEBI (Mutual Funds) Regulations, 2026 lowers the maximum a scheme may charge as its daily net assets rise, from 2.10 per cent on the first Rs 500 crore down to 0.95 per cent on the balance above Rs 50,000 crore for equity oriented schemes. It does not compel any reduction. The scheme's disclosed expense ratio is the only reliable figure.
What exactly did AMFI report for July and August 2026?
AMFI reported AAUM of Rs 86,33,798 crore for July 2026 and AUM of Rs 85,75,657 crore as on 31 July 2026. For the following month it reported AUM of Rs 87,07,888 crore as on 31 August 2026 and AAUM of Rs 88,30,776 crore for August 2026.
Is the expense ratio the total cost of holding a mutual fund?
Not by itself. Regulation 67(1) defines total expense ratio as the base expense ratio within the Regulation 66(7) limit, plus brokerage permitted under Regulation 66(9) — capped at 0.06 per cent of trade value in cash market transactions and 0.02 per cent in derivatives transactions — plus transaction costs under Regulation 66(10) and statutory levies. An exit load of up to 3 per cent of net asset value is also possible under Regulation 44(4).
Do index funds and ETFs get the same slab treatment?
No. Regulation 66(7)(b) sets a flat maximum base expense ratio of 0.90 per cent for an index fund scheme or an exchange traded fund, with no AUM slabs. The same sub-regulation caps a fund of funds investing in liquid schemes, index funds and ETFs at 0.90 per cent, a fund of funds holding at least 65 per cent in equity oriented schemes at 2.10 per cent, and other funds of funds at 1.85 per cent.
How are gains on equity oriented fund units taxed?
Units of an equity oriented fund held for more than 12 months produce long-term capital gains taxed under Section 112A at 12.5 per cent, with gains up to Rs 1,25,000 in a year exempt. Units held for 12 months or less produce short-term capital gains taxed under Section 111A at 20 per cent. Both rates apply to transfers on or after 23 July 2024, with surcharge and 4 per cent cess on top.
Does a lower expense ratio increase the tax bill?
The rate does not change, so the saving is kept in full. A cheaper scheme delivering the same gross return produces a larger gain, and that gain is taxed at the same 12.5 per cent above Rs 1,25,000 under Section 112A. There is no higher rate triggered by a lower cost.
Are close-ended schemes priced on the same ladder?
No. Regulation 66(7)(a) sets flat ceilings for close-ended schemes — 1.00 per cent of daily net assets for equity oriented schemes and 0.80 per cent for schemes other than equity oriented — with no AUM slabs at all.