Investors’ confidence in equity mutual funds remains strong with the segment attracting Rs 39,688 Crore in January, driven by sharp inflow in small cap and flexi-cap schemes, even as market volatilities continued.
However, this was 3.56 per cent lower than the net inflow of Rs 41,156 Crore registered in December. The latest fund infusion by investors also marks the 47th consecutive month of inflows into the segment, according to data released by Association of Mutual Funds in India (AMFI) on Wednesday.
Moreover, inflows into systematic investment plans (SIP) came at Rs 26,400 Crore, a tad lower from December’s Rs 26,459 Crore. The SIP assets under management stood at Rs 13.2 Lakh Crore, which is around a fifth of the overall pie.
“Despite market volatility, SIP contributions remained robust, totalling Rs 26,400 Crore for the month. We will continue to educate investors to stay invested through phases of volatility with a focus on disciplined, long-term approach to wealth creation,” Venkat Chalasani, Chief Executive, Amfi, said.
The decline in equity fund inflows occurred amid sluggish equity markets, with the BSE Sensex dropping by 1.28 per cent in January.
The investors’ focus towards making the most of the market fall in January can also be gauged from the fact that around 30.7 Lakh new folios were added in January, Himanshu Srivastava, associate director- manager research, Morningstar Investment Research India, said.
Further, volatility in the Indian equity markets, combined with geopolitical uncertainties and anticipation of the Union Budget, led to a decline in equity mutual fund AUM, Jatinder Pal Singh, CEO, ITI Mutual Fund, said.
The assets under management (AUM) for equity-oriented mutual funds dropped by 4 per cent in January to Rs 29.46 Lakh Crore from Rs 30.57 Lakh Crore in December.
Within the equity schemes, sectoral or thematic category attracted investors with the highest net inflow at Rs 9,016 Crore, which is way lower than Rs 15,331 Crore inflow in December.
The midcap category saw inflows of Rs 5,148 Crore in January 2025, while the smallcap category witnessed infusion of Rs 5,721 Crore, the data showed.
The small and midcap schemes of mutual funds continued to attract investors with inflows highlighting their preference for these segments largely driven by the high returns that they have generated over the last few years, Srivastava said.
The large schemes, which are being recommended by a slew of experts as a safer bet, saw inflows rising to Rs 3,063 Crore in January from Rs 2,010 Crore in December, while inflow in flexi-cap category grew to Rs 5,697 Crore from Rs 4,731 Crore.
Apart from equities, debt funds registered an inflow of Rs 1.28 Lakh Crore in the month of January, against an outflow of Rs 1.27 Lakh Crore in December.
The inflow in debt funds was primarily in the overnight, ultra-short duration, low duration and money market funds along with liquid funds which offset the outflows in debt funds with a maturity of over one year, Sanjay Agarwal, senior director, CareEdge Ratings, said.
Additionally, the inflows into gold Exchange Traded Funds (ETFs) to the tune of Rs 3,751 Crore indicate a shift toward safer assets during uncertain times.
The overall assets under management of mutual funds came at Rs 67.25 Lakh Crore as on January 31, 2025 as compared to Rs 66.93 Lakh Crore in the previous month.