The sharp decline was largely attributed to reduced inflows in mid and small-cap funds, which saw a drop to Rs 3,406 crore and Rs 3,722 crore in February.
Amid continuous sell-off, inflow in equity mutual funds dropped 26 per cent to Rs 29,303 crore in February. The significant drop comes amid continued market volatility and primarily due to a significant decline in investments in small and midcap schemes.
This was the second consecutive month of decline in inflow in equity funds. However, net equity mutual fund inflows remained positive for the 48th consecutive month.
According to data released by the Association of Mutual Funds in India (AMFI) on Wednesday, equity-oriented mutual funds saw an inflow of Rs 29,303 crore in February, way lower than Rs 39,688 crore registered in January and Rs 41,156 crore in December.
The sharp decline was largely attributed to reduced inflows in mid and small-cap funds, which saw a drop to Rs 3,406 crore and Rs 3,722 crore in February, compared to Rs 5,147 crore and Rs 5,720 crore in January, respectively.
In large-cap funds, inflows totalled Rs 2,866 crore, down from Rs 3,063 crore in January.
Jatinder Pal Singh, CEO, ITI Mutual Fund, said that the decline occurred during a period of significant market correction due to multiple external factors, primarily global trade tensions created by uncertainty on US tariffs.
“This resulted in the benchmark BSE Sensex TRI experiencing a month-on-month decline of over 5.5 per cent. Gross equity inflows also saw a reduction of 18 per cent, decreasing from Rs 66,630 crores in January 2025 to Rs 54,428 crores in February 2025.
What should investors do?
Suranjana Borthakur, Head of Distribution & Strategic Alliances, Mirae Asset Investment Managers (India), said that SIP inflows have come down, but the drop is not significant.
“I believe investors should continue their SIP flows as it is a great time to accumulate units,” he added.
Within the equity categories, sectoral/thematic funds witnessed the highest net inflow of Rs 5,711 crore, followed by Flexi Cap Funds with Rs 5,104 crore.
Apart from equities, gold exchange traded funds (ETFs) saw an inflow of Rs 1,980 crore as against Rs 3,751 crore in January.
However, debt funds registered an outflow of Rs 6,525 crore last month after experiencing an inflow of Rs 1.28 lakh crore in January.
Overall, mutual funds attracted over Rs 40,000 crore in the month under review as compared to a staggering inflow of Rs 1.87 lakh crore in January.
This has dragged the overall assets under management of mutual funds to Rs 64.53 lakh crore in February-end as compared to Rs 67.25 lakh crore in the preceding month.