Aditya Birla Sun Life Amc Ltd

NSE:ABSLAMC

Q2-2026 Earnings Call

[Operator]

Ladies and gentlemen, good day, and welcome to Aditya Birla Sun Life Asset Management Company Limited Q2 and H1 FY '26 Earnings Conference Call hosted by Rik Capital. [Operator Instructions] Please note that this conference is being recorded.

I now hand the conference over to Ms. Richa Singh from Rik Capital. Thank you, and over to you, ma'am.

[Richa Singh, analyst]

Thank you. Good evening, everyone. I welcome you all to Aditya Birla Sun Life Asset Management Company Limited of their Q2 and H1 FY '26 Earnings Conference Call. Along with us from the management, we have Mr. A. Balasubramanian, MD and CEO; Mr. Pradeep Sharma, CFO. We are thankful to the management for allowing us this opportunity.

I would now like to hand over the call to Mr. Bala sir for his opening remarks. Thank you, and over to you, sir.

[A. Balasubramanian, executive]

Thank you, Richa, and let me begin extending my Diwali greetings and prosperous New Year to everyone. And good evening to everyone, and thank you for joining us on the call today. I'm sure all of you would've had a chance to review our earnings presentation, which is accessible on both the stock exchanges and on our company website.

Let me begin with a quick commentary on economic outlook and update on the mutual fund industry. The global economy, as you all know, continues to show resilience despite trade tensions and policy uncertainties and global growth remains stable at around 3%, with the trade expanding significantly in the first half of 2025. However, tariff-related volatility has prompted countries to reassess supply chains and trade alliances. India, of course, stands at a pivotal moment, transitioning from really participating in the global growth to becoming a pivotal force in shaping the world economic future. The economy grew by about 6.5% in FY '25 with growth accelerating to 7.8% in Q2 FY '26, the highest in 5 quarters.

For FY '26, RBI projects GDP growth at 6.5%, maintaining India's position as one of the fastest-growing major economies globally. Inflation has moderated significantly with the CPI falling by 1.5% in September '25, the lowest in the last 99 months. The CP inflation forecast for FY '26 has been revised down to 2.6% with inflation expected to remain below the RBI target for most of the year.

Key policy initiatives, including GST 2 and RBI accommodative stance with the repo rate at 6.4% underscores the stability-led growth, while India's fiscal position remains solid and on track to meet the deficit target.

Merchandise exports grew by 6.7% year-on-year in September '25, while service exports surged 14% in Q4 FY '25, driven by IT and business services, reinforcing India's strengthening global competitiveness and emergence as service hub.

Indian equity markets are positioned for sustained momentum over the medium term. With the recent correction, valuations of large cap stocks and broader markets are now closer to their long-term averages with the earnings growth in the medium term estimated in the range of about 12% to 14%.

Strong domestic flows continue to support the market, making up for outflows from international investors with the domestic mutual fund ownership share reaching new highs. India's long-term structural themes, including advanced manufacturing, infrastructure investment, rising discretionary spending and digitalization positions of the -- positions the economy well for sustained growth and emerging investment opportunities.

Coming to the mutual industry update. The quarterly average AUM of the mutual fund industry as of 30 September 2025 stood at INR 77.13 lakh crores as compared to INR 66.21 lakh crores as of 30 September 2024, growing by 16% year-on-year. The industry SIP flows for September '25 stood at INR 29,361 crores, growing by 8% quarter-on-quarter. The total number of mutual folios stood at INR 25.7 crores as of 30 September 2025.

The industry saw a total NFO collection in Q2 FY '26 about INR 30,200 crores coming from both equity, some debt fund launches with the equity side primarily driven by sectoral, thematic and multi-asset allocation funds. Individual average AUM for September '25 grew by 12% year-on-year from INR 42.11 lakh crores to INR 47.21 lakh crores, contributing around 60.7% of the total AUM. B-30 mix with an average AUM of INR 14.5 lakh crores, accounting for 18.6% of total AUM.

Coming to ABSLAMC performance hight. At ABSLAMC, I'm pleased to announce that we have sustained and crossed a remarkable milestone of INR 4.25 lakh crores in average AUM. This achievement is a testament to our team dedication and commitment to growth. Our overall average assets under management, including alternate assets stood at INR 4.61 lakh crores, growing by 14% year-on-year. Our mutual fund quarterly average AUM reached INR 4.25 lakh crores, growing by 11% year-on-year. The quarterly equity average AUM crossed INR 2 lakh crores, including alternate assets.

Our SIP contribution for September 2025 is about INR 1,100 crores coming from 39 lakh folios contributing to SIP accounts. Our SIP AUM contributed around 44% of the total AUM, reflecting stickiness of our assets. The total number of investors folios for September '25 stood at INR 1.07 crores, witnessing 5% year-on-year growth.

Our consistent investment performance and improvement are driving robust momentum across our focused funds, along with fixed income and arbitrage funds, highlighting the diversification and the strength of our product suite.

We continued our engagement with our distribution partners by hosting growth summits across India during the quarter to strengthen our market positions and drive sustained growth. And these strategic events showcase our investment philosophy on thought leadership, while empowering our distributors partners and expanding our market footprint. In fact, this engagement at the ground level has enhanced the flows in our focused equity funds that we are promoting as part of the push compared to the last 3 quarters.

Our alternate business represents the cornerstone of our growth story. We have built a high-caliber team with deep domain expertise, underscoring our commitment to building future-ready capability. The equity segment of our alternate platform has gained significant momentum.

[Operator]

This is the operator. Sorry for interrupting. Your voice is breaking. Let me just reconnect you once again.

The management line has been reconnected. Please go ahead.

[A. Balasubramanian, executive]

Thank you. I'm sorry for that -- for this -- for the trouble. Coming to the alternate business, our alternate business represents the cornerstone of our growth story. We've built a high-caliber team with deep domain expertise, underscoring our commitment to building future-ready capability.

The equity segment of our alternate platform has gained significant momentum, complemented by our expanding suite of credit offerings. We continue to refine our PMS and AIF products across equity and fixed income to address the sophisticated recruitment of HNIs and family offices. And our research demonstrates the success of this strategic focus.

PMS and AIF assets grew significantly from INR 3,852crores in Q2 FY 2025 to INR 30,250 crores in Q2 FY 2026, representing an increase of about 8x. The ESIC mandate accounted for about INR 25,800 crores of September 30, '25, while our PMS and AIF AUM, excluding ESIC, has achieved a strong 14% year-on-year growth, reflecting solid organic momentum in our core alternate business. In fact, we are seeing increased participation coming from MFDs to sell our PMS product.

I'm delighted to announce that we have been selected by the EPFO to manage its debt portfolio over the next 5 years as disclosed by the Central Board of Trustees during their press conference. We are currently awaiting the formal confirmation letter from EPFO office. And this is a significant milestone that reinforces the trust placed in our capabilities.

We successfully completed the first close of ABSL Structured Opportunities Fund 2 during the quarter and preparing to launch ABSL India Equity Innovation Fund. Our real estate business has built significant momentum and gained traction, driven by strong investors' interest and robust pipeline of opportunities.

Our real estate book has grown by 23% year-on-year, and we are on track of doubling our book size by the end of this financial year, backed by the strong performance and track record that we have created of giving back money to investors and the experience that we are creating gives us the confidence that real estate business of ours will also continue to see a growth momentum.

We are focused on scaling this vertical by deepening our stakeholder engagement and leveraging strategic partnership to drive execution excellence. And these collective efforts aim to build the resilient high-quality alternative platform, positioning us for sustained growth and well-diversified product portfolio across the alternate space.

With the new leadership and dedicated teams now in place, we are well equipped to elevate our alternate business, broadening our product suite and deepening our investor engagement. Our offshore average assets stood at INR 4,795 crores for Q2 FY '26. During the quarter, we have witnessed withdrawals from a few customers in view of the portfolio restructuring, more into our other emerging market economies compared to India.

Under the GIFT City platform, we have a fundraising underway for the India ESG Engagement Fund, ABSL Flexi Cap Fund and ABSL Global Bluechip Fund, which are created for outward remittance as well as for inward remittance into our domestic mutual funds.

On the passive front, during the quarter, we have launched ABSL BSE 500 Momentum 50 Index Fund and ABSL BSE 500 Quality 50 Index Fund with the aim to build our passive AUM. As of September 2025, our total passive quarterly average assets reached INR 36,000 crores, growing by 20% year-on-year and the customer base reached 13.5 lakh folios. Our current product suite comprises 53 distinct offerings designed to meet varied investment needs.

Coming to the financial performance. Our Q2 FY '26 revenue from operation stood at INR 461 crores, up 9% year-on-year. Q2 FY '26 operating profit stood at INR 270 crores, up 13% year-on-year. Profit before tax for Q2 FY '26 is at INR 316 crores and profit after tax stood at INR 241 crores.

Our H1 FY '26 revenue from operations stood at INR 909 crores, up by 12% year-on-year. And H1 FY '26 operating profit stood at INR 525 crores, up by 17% year-on-year. H1 FY '26 profit after tax stood at INR 518 crores, up 18% year-on-year.

At ABSLAMC, we remain committed to leading this transformation by building innovative products, robust platforms and strategic partnership. Backed by a dynamic team, we continue to drive momentum that democratize wealth creation and empowers investors to achieve their financial goals.

With this, I would like to open the floor for any questions. I'll be joined by Pradeep Sharma, who is our CFO, to take some of the questions as we feel appropriate. Thank you.

[Operator]

[Operator Instructions] The first question comes from the line of Dipanjan Ghosh from Citi.

[Dipanjan Ghosh, analyst]

A few questions from my side. First, if we were to see your SIP flow trajectory, despite the [indiscernible] improvement that we are seeing in some of your schemes, the SIP market share has been kind of declining. So just two questions on this front. One is, if you can give color on your overall flow trajectory and that will give us some understanding of your redemption and lump sum trends on the equity side of things? And secondly, if I were to dissect this SIP market share decline, let's say, over the last 12 to 18 months across channels, which channel has been kind of been the biggest drag out there?

My next question is on the ESOP expense, if you can quantify the number for first half. And with this ESOP 2025 scheme, assuming it gets approved, what can be the ESOP cost rate over the next, let's say, FY '27, '28? And the third question is on the other expense that has been controlled quite well. So is there any one-off out there? Or is this a normal run rate that we should think of? And lastly, a data keeping question, if you can give the SIP AUM for the quarter?

[A. Balasubramanian, executive]

So coming to your first question on SIP. Of course, SIP, we have been seeing, while we have been adding new registrations that month-on-month, our new registrations have been rising. That is one area of focus that we have. Of course, given the fact that SIP growth for the whole industry has been quite very, very strong and also given the fact that we have always been one of the large players in the SIP book, our overall share looks slow. But otherwise, we have been maintaining that close to about INR 1,180 crores. And clear focus has been brought in to drive the SIPs across our channel partners. In fact, one of the targets that we have set is for the entire sales team to increase their focus on SIP numbers by way of increasing the registration. We are seeing month-on-month improvement on that.

In fact, the larger contributor to the SIPs is coming from the online platform, then second is MFDs. Third is the NDs. And fourth is the direct and banks -- sorry, banks and then direct. Online platform, largely on the base of the funds coming as part of the recommendation. In fact, 1 or 2 quarters before, we had reasonably good flows coming from the online platform.

And with the improvement of the performance that we are seeing across our equity scheme, our product is also coming as part of the recommendation list of some of our partners. In fact, a few of our banking partners have approved our products such as Flexi Cap and Frontline Equity as well as a few of our products, which are coming as a focused product. That is reflecting pretty well.

Next is improvement coming on product like Frontline Equity, Flexi Cap, GenNext Fund, Conglomerate Fund. Even in smaller mid-cap, too, we are seeing some kind of flows, which I see is a trend reversal compared to the last 2, 3 quarters. Therefore, that focus is there. Even for employees, we have rolled out incentive plans to step up the focus on the SIPs and therefore, the overall number should get better. So I'm -- clearly, I'm seeing some turnaround on this.

And also given the large size that we have built in the past, definitely, the SIPs expiries also comes along the way. That's something we cannot help it. At the same time, we continue to focus on building our book. So -- and then the silver lining would come by way of the performance improvement, now is reflecting on a 2- and 3-years basis, which ultimately should help us in getting recognition of this improvement of performance coming in the form of numbers as well that we are already seeing it in the focused equity product. In fact, where we have seen significant redemption in the past due to the variety of reasons, we have seen a declining redemptions on all those schemes given the improved performance we are seeing. I think both combinations should go well.

On the expenses part, I'll ask Pradeep to answer.

[Pradeep Sharma, executive]

Yes. So Dipanjan, just to add, you also asked SIP AUM, which is around INR 82,000 crores. Okay.

[A. Balasubramanian, executive]

44% of the...

[Pradeep Sharma, executive]

Yes, which is around 44% of our total equity AUM. As far as expenses are concerned, you asked for other expenses. This is, by and large -- see, this depends on the various engagement activities we undertake in the market. So a few crores here and there on quarter-on-quarter volatility would be there, but this is normal. There's nothing one-off case in this quarter.

[A. Balasubramanian, executive]

And then the fourth question is on employees, right?

[Pradeep Sharma, executive]

Yes. So employee count is around 1,719 people for the quarter.

[Dipanjan Ghosh, analyst]

And sorry, also the question on ESOP expense for the first half and how to think of it for the next 2 years?

[Pradeep Sharma, executive]

So in the quarter, in the current quarter, there are no major ESOP expense because the last ESOP scheme got over last year. Today, in the Board meeting, our Board has approved a new ESOP scheme, which is subject to the shareholders' approval, maybe in next 3 to 4 months. And then once it is approved, we may have the impact and we will communicate to you.

[A. Balasubramanian, executive]

That we'll come back, Dipanjan, on that once it is approved.

[Operator]

[Operator Instructions] Next question comes from the line of Harshit Toshniwal from Premji Invest.

[Harshit Toshniwal, analyst]

Sir, am I audible?

[A. Balasubramanian, executive]

Yes, Harshit.

[Harshit Toshniwal, analyst]

Sir, I had two questions. One is on the SIP piece itself. So I got some part of your explanation. But if I look at the SIP just in terms of the market share, then we see a sharp dip versus last quarter. I think it was -- it has moved from 4.1%, 4.2% to 3.6%, 3.7%. Now it's probably the older, the redemptions might be lower. But do you think that is it in the newer SIPs getting created, our market share is negligible compared to the 3.5% we have on the overall flow? Is that the -- what can be done to address that? Because -- despite the performance has started to improve, but that reflection in the SIP number is not there.

And the second one was on the yield, sir. On a like-to-like basis, if I look at the equity yields, then probably I think we would assume that around -- at least back calculation suggests around 2 to 3 basis points yield decline. If you can help us know that, is there anything particular which has changed in the distributor commission or the slabs, which has led to that number? So these two questions, sir.

[A. Balasubramanian, executive]

Harshit, as far as SIP is concerned, we did have some maturities of SIPs, which just came in STP form, largely on account of that. Otherwise, the SIP is coming from retail continues to show a strength. And again, SIP new registration, something which we keep track, where our incremental market share coming from SIP registration also have been on the rise. But sometimes when we get SIPs by way of an STP, which largely come under fixed income and then they do an equity STP, we have seen something is getting expired. But this thing in anyway is quite common, and that's something it's not -- doesn't make me worry.

At the same time, the renewed focus that we are bringing in terms of driving the numbers on be it the improved performance on one side with the product getting approved from the channel partners -- of leading channel partners in the banking side. So all of them should only help in terms of improving it. But overall, cross-volume market share has been getting -- has been improving. Ultimately, this will lead to actually improvement on the overall numbers.

In fact, we even have focus on existing SIP investors, how we can increase the ticket size from the existing SIP investors by way of drive to the existing SIP investors, increase the number of products per customer from 1.42 to about 1.56. That's something we are actually doing a drive. All such initiatives should only help in increase the numbers.

In fact, even from the industry point of view, while the numbers I keep tracking it, I think some of the accounting, which I think comes at different channel partners, even daily SIPs have grown, would also gets counted and different type of SIP is being driven by different set of people also being counted as long as we are present in those segments. For example, daily SAP, we are not fully present given the cost of acquisition of customers on this pie is low -- high. At the same time, ticket size are low. Those are some of the things we keep evaluating on a time-to-time basis. And then we'll, of course, push it as and when there is -- as we see merit for pushing our SIP growth.

And as far as your margin is concerned...

[Harshit Toshniwal, analyst]

Sir, if I can just ask one thing on this. So if I understand correctly, you are saying that on a gross basis, our share is improving, but there are certain redemptions, which have been keeping the net share now. So if I can say, are these redemptions from, say, more than 5-year holding category or are these redemptions from any particular channel? I'm just trying to see that do you see a sunset period by which probably that higher redemption class of SIP will be lower?

[A. Balasubramanian, executive]

Largely, it's coming from digital platforms, Harshit. I think in digital platform where we also had significant volume pickup and there also expiries are generally rare there. But this is a function of every market. We have to switch from one to other because digital platform is the one generally is low. Other MFDs and the traditional banking channels is high. But some of the partners with whom we have -- we enjoyed high market share in the past, and they all have signed up for a good number of years. And that's something which also we see as the SIP is getting expired. More than cancellation, they get expired. We got to win them back.

So we're going to have a separate strategy called SIP win back through the proactive communications and also predicting that which are the customers who have potential of redeeming. And this exercise that is being carried out, all should ultimately add to the overall improvement in the numbers.

[Harshit Toshniwal, analyst]

Sir, if I may ask like I think 2 quarters back, we got a significant bump up in SIP because of the digital platform. So will it be right to say that what we got at, say, half year back, that is only creating redemption? And in that case, if you can also give some color on the mix which is coming through these online channels, say, if I take Groww, Zerodha, Angel, the 3, 4 large online channels, direct online channels, how much of our SIP would be incrementally coming from these channels?

[A. Balasubramanian, executive]

See, roughly about 34% of the new SIP subscription coming from digital channel. And while...

[Harshit Toshniwal, analyst]

This 34% would be on volume terms. If I look at the value, then would it be that large?

[A. Balasubramanian, executive]

If you hit on the SIP amount. In the SIP amount.

[Harshit Toshniwal, analyst]

Okay. Okay. 35% of incremental is from these online platforms.

[A. Balasubramanian, executive]

Yes, the online platform. Sometimes, of course, as I mentioned, these channels are very dynamic. I think within the online platform, there are platforms which are more ARM-based platform where we are seeing an improvement in the numbers. I think it's quite mixed. We can't generalize it. The online platform, I think is -- everything is getting canceled or give volume. Some give volume, somebody else, of course, increase the market share. These are the moving numbers, Harshit.

[Harshit Toshniwal, analyst]

Got it. Got it. Got it. And any online marketing or online promotion of our performance, does that help in retention? Because I'm trying to understand that, sir, if on a gross basis, we have been continuously improving and if I look at our performance also, that has picked up a lot in the last 2, 3 quarters. But just wanting to see that probably a place where we can maintain that 4% SIP flow and grow from there on a net basis is where I'm thinking that is there a time line which we should look to? Or it's very difficult to predict that?

[A. Balasubramanian, executive]

No, no. One thing is it remains a high focus area, Harshit. I think that's something is there. And whatever we have to do on an ongoing basis, either through engagement, through the communications or highlighting our product improvement on performance and making it part of the recommendation list. So that is a continuous exercise. And wherever, of course, we have to spend money in terms of promotion, for example, we are already rolling out a drive called SIP, Sabse Important Plan drive that you do last quarter. And this quarter, too, we have already planned some more initiatives to drive the SIP across India. And this will remain as an ongoing regular exercise rather than that we have to do on time.

From a sales team point of view, of course, while they have been improving our overall productivity, which is what I mentioned about gross sales market share has been showing an improvement. At the same time, improving the overall SIP subscription in terms of adding new customer base will remain one of the key. That's something is also being driven by way of encouraging through the incentive plan to the sales team. So this is going to be an ongoing exercise, Harshit.

Coming to your question on the margin yields.

[Pradeep Sharma, executive]

So Harshit, yields for equity are in the range of 64, 65 basis points. Yes, there is a drop around 1 to 2 basis points. That is because of the -- from earlier quarters because of the telescoping prices mainly because our equity AUM has grown from around INR 1,80,000 crores to around INR 1,92,000 crores. So I think going forward, it should remain in the same range, around 64, 65 basis points in equity.

[A. Balasubramanian, executive]

And then, marginal drop is -- the marginal drop is on account of the offshore AUM dip that has led to about 0.4 basis points kind of drop.

[Harshit Toshniwal, analyst]

Got it. Got it. And one last thing, sir, on the EPFO debt money, which we plan to manage. Do you think that we'll have to -- will this be a profitable thing altogether? Or this will be a marginally loss-making business?

[A. Balasubramanian, executive]

I would say cost-neutral. I'll not say loss-making neither profit-making. It's a cost-neutral because we have a team dedicated for managing a large pool of money across different segments. The team strength will be leveraged to manage this money. I think we need to also look at it as this is a prestigious mandate and improve the overall credentials of our existence of 30 years in managing money. So ultimately, this will have a rub-off effect as we move forward.

[Operator]

[Operator Instructions] Next question comes from the line of Mohit Mangal with Centrum.

[Mohit Mangal, analyst]

My first question is on the employee expenses. So if I look, employee expenses grew 6% Y-o-Y in Q2. And if I look at Q1, the Y-o-Y growth rate was 4% and you said that the ESOP won't, I mean, ideally come, say, this year. So do you think it will remain in single digits at around 6%, 7%? Or it will grow in higher double digits for the entire year?

[Pradeep Sharma, executive]

Yes. So Mohit, in this quarter, we had some reversals of around INR 6 crores on our variable pay provision of last year after we disbursed all the amounts basis the employees' performance. So if you see on a normalized basis, it should be higher by around 12% instead of 6%.

[Mohit Mangal, analyst]

Understood. Understood. So for the entire year, basically 10% to 12% is something that we can expect, right?

[Pradeep Sharma, executive]

Yes.

[Mohit Mangal, analyst]

Right. My next question is in terms of new pipeline of schemes that can be expected in H2.

[A. Balasubramanian, executive]

Yes, we have one product approval already in place for us, and that's something we've been debating when to launch it given the fact that too many holidays are there. We want to, of course, plan it carefully that we have a good number of working days for us to have the NFO within the mutual fund space.

And second, we also planned one launch of new product under the alternate AIF side, which is in the PMS side. Plus on the GIFT City, also we have a product which is currently running for investing in overseas market. And then the last piece, of course, we are preparing ourselves for SIF launch. We already got the approval from SEBI for the brand, which is called APEX. We already filed 2 products with SEBI for launching it, which is Arbitrage Plus kind of product. That's something we'll start with that to begin with. We'll start with Arbitrage Plus kind of product. And then as we finish the first launch, we'll go for long-short once we have a talent in place, which we are currently in the process of getting on board. Once it is done, then we'll go for a long-short fund product also.

[Mohit Mangal, analyst]

Understood. Understood. So basically, we have a team in place for this SIF and we'll basically be there -- in financial year '26, we could see some impact of that in P&L, right?

[A. Balasubramanian, executive]

Yes. Only thing we don't have in the long-short, though we have a team, but they have not been in a position to manage the long-short fund using the derivatives big time, only to generate alpha over the index. That's something we thought we'll have a dedicated person to drive that. That something should be in place maybe within about 1 to 1.5 months' time. Otherwise, the rest of the product like hybrid kind of product, we already have internal capability.

[Mohit Mangal, analyst]

Understood. And sir, my last question is towards AUM. So that, I think we have seen a lot of growth, although sequentially there was a degrowth. But in terms of yield, do we make around 0.6% on average AUM on this?

[A. Balasubramanian, executive]

Yes, I think it's even higher if I'm not wrong.

[Pradeep Sharma, executive]

Actually -- and our average is around 0.8,%, Mohit.

[A. Balasubramanian, executive]

We get -- roughly about 80 basis points we get, Mohit. In fact, the last 2, 3 quarters, we have seen the contribution coming from PMS's overall revenue. We are seeing an upward trend. In fact, I must also mention, in addition to AIF -- sorry, in addition to equity PMS and AIF, we are also seeing the credit opportunities fund and real estate credit fund, both have not only stabilized, also now done the first closure and investments also have been more or less done. With this, that revenue contribution coming from this segment also will keep improving.

[Mohit Mangal, analyst]

Understood. So sir, out of this INR 461-odd crores, how would we -- how much would be the PMS and AIF this time?

[Pradeep Sharma, executive]

So this would be, Mohit, around INR 31 crores to INR 32 crores.

[Operator]

[Operator Instructions] Next question comes from the line of Amit Singh with Indo Smith Insight Private Limited.

[Unknown Analyst]

Am I audible?

[A. Balasubramanian, executive]

Yes, you're audible.

[Unknown Analyst]

Congratulations, sir. My question is on the growth of arbitrage fund. Last quarter, you mentioned that it was behind the industry. So how has the business segment performed in this quarter? And what are the changes in your strategy to improve this performance?

[A. Balasubramanian, executive]

Sure. So of course, this is one of the fund where we felt that we can grow a little faster than the industry. In fact, we had reasonably good AUM growth, going about 20% rate of growth compared to the industry. In order to improve the performance, of course, we have done a good mix of generating a little higher return by increasing the focus, one, on the fixed income space between the selection of securities in the fixed income space for the respective maturities, adding about 7, 8 basis points to total return. And also the efficiency that we have brought in terms of identifying opportunities wherever it's available to improve the overall return. That's where I think the performance arbitration also has been supporting the overall growth momentum.

[Unknown Analyst]

Okay. Sir, the second question is as you mentioned in the last quarter, the mid-cap and small-cap segment does not have the large presence. So what other progress has been made since then? And what other strategies have been implemented to improve the market share in this segment?

[A. Balasubramanian, executive]

Yes. So in fact, our -- we have seen reasonably good performance with respect to the mid-cap fund and small and mid-cap also is now part of the overall performance improvement strategy that we have. We recruited a gentleman almost about a year back, and we gave him some time to settle down and start focusing on building the performance of these 2 schemes so that -- and also the multi-cap fund so that we'll be able to actually get our due market share in this space.

We're already seeing the flow coming in the form of improvement in performance. In fact, our flows both in mid-cap and small cap is positive, though it's not to the extent of what industry is getting. But definitely, this will probably help in terms of -- as we move forward to get our due market share in this space.

[Operator]

Next question comes from the line of Divij Punjabi with Banyan Tree Advisors.

[Divij Punjabi, analyst]

Yes. My question was around the offshore AUM. So that has declined sequentially. So can you just maybe share the yield on that? And also the reason for the decline?

[A. Balasubramanian, executive]

Yes, offshore. See, offshore, largely, of course, we have been managing a few mandates from some of the large funds that invest in India. As you know that India exposure by most of the FIAs have been on the reduction side. And having managed the money for almost 14, 15 years, very successfully generating more than 2% alpha over MSA index. But due to the allocation chain that we had, that has moved out. But however, impact of that, it's about 0.2%, which is roughly about 0.4 basis points. 0.4 basis points roughly is the impact on the contribution coming from the offshore assets. Nothing significant. But definitely, because of the reduction that FIAs generally have been having on India exposure and our money also had moved out. I'm sure given our strong track record that you have given them over 14, 15 years, some of them may even come back as they gain confidence in India coming back.

[Divij Punjabi, analyst]

Sure. I just have one more question around the debt funds. So can you just talk about what is driving the growth in the debt segment? Year-on-year and quarter-on-quarter, we are seeing decent growth. So which are the segments over there? And longer term, also, what is our strategy around active versus passive funds?

[A. Balasubramanian, executive]

So as far as debt fund concerns, largely the fixed income team have been having a very bullish view on interest rates, especially calling the RBI move on cutting the interest rates. In fact, all the moves of RBI, our team has been predicting it quite well ahead of time and positioning the portfolio to benefit investors by running a duration portfolio. That's something helped us in building fixed income side.

And second, within the fixed income, hybrid funds, which is equity-cum-fixed income fund, which is a new category. Also, we could add assets given the tax benefit that accrues to investors. At the same time, the we conservatively manage between equity and fixed income and both of them have helped. And that's where, I think, money has come. Large segment of the people have come from both HNIs and corporate treasuries as well as MSMEs.

And which is your second question?

[Divij Punjabi, analyst]

Active versus passive.

[A. Balasubramanian, executive]

Yes, active versus passive. Of course, passive is something we have seen some kind of good momentum by way of launching new product. In fact, we launched 2, 3 funds last year like defense fund we launched and that has done exceedingly well. We have seen flows coming in the segment. We have positioned some of our product launches in the passive side, which are more like unique, something you can consider as a fund that can help investors diversify by choosing funds like Quality 50 Fund and Momentum Index Fund. That's something we continue to drive a number of product innovations and structuring new product.

And third, we've also seen flows coming in our silver fund and gold fund. In fact, our silver fund crossed a size of about INR 2,000 crores. And in the last 2 weeks when the market turned volatile, even we had to also close the fund for subscription for some days. Of course, we are now coming back in terms of opening the fund for subscription. One good thing is, given the fact that we have the product in place, when the time was favorable for getting flows in these funds, we could get some kind of flows both in silver and gold fund as well. So this is an ongoing exercise, rather ongoing push that we are giving in terms of our passive funds.

Active continues to remain a focus area, no doubt, both in building SIPs as well as growing our site. At the same time, passive also will remain as one of the asset-looking fund from investors point of view that continue to be driven by a separate team of people to keep a focus.

And lastly, we're also trying out some of these broking forms so that our product will become as part of their daily trading that they can do on ETF while creating some of the buying behavior in the exchange platform. These are some of the initiatives we are taking. And hopefully, it should help in terms of increasing our number of customers. In fact, as I speak, we have about 13.5 lakh customers in ETF platform. I think that will continue to remain a focus area for building asset class.

[Operator]

Ladies and gentlemen, that was the last question for today. We have reached the end of question-and-answer session. I would now like to hand the conference over to the management for closing comments.

[A. Balasubramanian, executive]

Thank you, everyone, for joining the call. And with this, we conclude our Q2 FY '26 earnings call. Thank you.

[Operator]

Thank you. On behalf of Aditya Birla Sun Life AMC Limited, we would like to formally conclude this Q2 and H1 FY '26 Earnings Conference Call. We sincerely appreciate your participation in this event, and we kindly request that you now disconnect your lines. Thank you for your time and engagement.