Veteran fund manager Samir Arora just days ago suggested that mutual funds stay away from IPOs for 30 days, arguing that the relentless supply of fresh paper has been weighing on the market. With domestic equities making little headway for quite some time now, his concern may find wider resonance.Mutual funds are hardly staying away from IPOs. Fed by the seemingly endless SIP fountain of over ₹30,000 crore a month – apparently, a good part of it into equities — they are participating in more IPOs this year. However, what has changed is how much they are putting to work.A bl.portfolio study shows that mutual funds have invested in about 79 per cent of IPOs for which data are available so far in 2026, up over six percentage points from 73.3 per cent in 2025. But the amount invested tells a different story. MF investment, measured against the aggregate size of IPOs launched, has fallen to 26.6 per cent in 2026 from 32.7 per cent last year and 34.8 per cent in 2024.The divergence is even starker on a per IPO basis. Mutual funds invested an average of about ₹412 crore in every IPO they participated in this year, compared with ₹749 crore in 2025 and ₹771 crore in 2024. Fund houses are saying yes more often, but with smaller sums.Mutual funds invest in IPOs either through main book allocations (anchor and non-anchor portions) or via secondary market purchases post-listing. Due to limited visibility on non-anchor allocations, this study uses month-end MF disclosures to capture first-month holdings in 435 IPOs between CY2020 and CY2026 YTD.For 2026, the study covers 61 of the 64 IPOs launched up to September 3, 2026. MF investment data, based on month-end portfolio disclosures, are available for 36 IPOs. For the remaining 25 IPOs, launched after July 31, 2026, for which MF disclosure data are not yet available, the data are based on the companies’ post-allotment shareholding disclosures.More and lessThe latest findings reverse part of the trend captured in our August 2025 article, ‘Mutual funds turning choosy on IPOs’.MF participation in IPOs had slipped from 95 per cent in 2021 to 90 per cent in 2022, 80 per cent in 2023 and 2024, and 73 per cent in 2025. But at about 79 per cent in 2026, participation is back to 2023 and 2024 levels.Money, however, has not followed with the same enthusiasm. MF investment was equivalent to 23 per cent of the aggregate issue size in 2021 and 2022 and 24 per cent in 2023. It surged to 35 per cent in 2024 and remained elevated at 33 per cent in 2025. Against that backdrop, the 27 per cent figure in 2026 looks more like a cooling-off after two unusually aggressive years than a retreat from IPOs.Selectivity may simply have moved from the front door to the dining table. Funds are rejecting fewer IPOs outright but taking smaller helpings when they participate.Size mattersThe 64 IPOs launched so far this year have raised ₹74,264 crore, giving an average issue size of about ₹1,160 crore. In 2025, 105 IPOs raised ₹1.77 lakh crore, or about ₹1,682 crore per issue. The average IPO has therefore been about 31 per cent smaller this year.The 45 per cent fall in average investments per IPO by MFs is considerably sharper than the decline in average IPO size, suggesting that issue size alone may not explain the lighter MF investments. It may also indicate greater discipline in position sizing after the unusually heavy deployment seen in 2024 and 2025.The picture can change quickly. Mega offerings such as Reliance Jio and NSE could make the final 2026 numbers look very different from today’s market dominated by smaller issues.So far in 2026, mutual funds have invested more than ₹1,000 crore each in the IPOs of Indo-MIM, SBI Funds Management, Manipal Health and Amagi Media Labs. In contrast, they have largely avoided smaller IPOs such as GSP Crop Science, Rajputana Stainless and Technocraft Ventures.Return ticketAverage listing day gains improved to 12.9 per cent in 2026 from 8.3 per cent in 2025.The picture after listing is mixed. Average returns after the 30-day lock-in period stand at 7.9 per cent, below last year’s 8.8 per cent. But returns after the 90-day lock-in period average 24.8 per cent, sharply higher than 7.1 per cent in 2025.So this is hardly a case of funds running away from IPOs. Instead, 2026 points to a more measured approach, with fund houses showing up more often but betting less.In IPO investing, attendance and appetite are two different things. This year, mutual funds have plenty of the former and noticeably less of the latter.Published on September 5, 2026