What’s the story
Debt mutual funds witnessed a massive outflow of ₹25,692 crore in November 2025, reversing last month’s inflow of ₹1.59 lakh crore.
The decline was mainly due to large withdrawals from overnight and liquid funds, two categories sensitive to liquidity changes.
Nehal Meshram from Morningstar Investment Research India said institutional investors withdrew surplus balances ahead of mid-quarter payments amid tightening system liquidity conditions.
Heavy outflows from overnight and liquid funds
Among the 16 sub-categories, most witnessed outflows during this period.
Overnight funds suffered the biggest blow with an outflow of ₹37,624 crore in November.
Liquid funds weren’t far behind either, witnessing redemptions worth ₹14,051 crore during the same period.
This trend highlights a shift in investor sentiment toward these categories amid changing market conditions.
Money market and ultra-short duration funds attract inflows
Despite the outflows from overnight and liquid funds, money market funds attracted the highest inflow of ₹11,104 crore in November.
Ultra-short duration funds also witnessed a healthy inflow of ₹8,360 crore during this period.
These trends indicate that while some categories are facing challenges due to withdrawals, others are still managing to attract investments amid changing market conditions.
Debt fund AUM declines amid market shifts
The assets under management (AUM) of debt funds fell by 0.81% month-on-month to ₹19.35 lakh crore in November, down from ₹19.51 lakh crore in October.
The decline was mainly due to weak demand-supply dynamics of bonds and investor caution amid rate-cut expectations, AMFI‘s monthly note said.
Despite the dip, average assets in debt mutual funds remain higher than last year, indicating potential opportunities for investors willing to adapt their strategies accordingly.