Mutual fund net inflows tumbled about 79% in February, dragged lower by sustained sell-offs in the domestic equity market. With key indices Nifty and Sensex sliding about 5% during the month, equity mutual fund inflows saw a significant 26% decline to Rs 29,303 crore in February, against Rs 39,688 crore in the previous month.
In January also, equity mutual fund inflows had fallen, though marginally, by 3.6% month-on-month. So this was the second consecutive month of decline in equity mutual fund inflows.
According to Association of Mutual Funds in India (AMFI) data, debt mutual funds logged outflows of Rs 6,525 crore in February. In the previous month, there were inflows of Rs 1.28 lakh crore in this category, data showed.
Net assets under management (AUM) of mutual funds stood at Rs 64.53 lakh crore as of February 28, 2025, according to AMFI data. In the previous month, net AUM was Rs 67.25 lakh crore.
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Out of 11 equity mutual fund categories, sectoral and thematic funds received the highest inflows to the tune of Rs 5,711 crore during the month under review. Flexi-cap funds saw inflows of Rs 5,104 crore during the same period.
There was a steep fall in inflows into mid-cap funds and small-cap funds. These categories saw monthly inflows of Rs 3,406 crore and Rs 3,722 crore in February, against Rs 5,147 crore and Rs 5,720 crore, respectively, in the previous month.
Large-cap funds witnessed inflows of Rs 2,866 crore against Rs 3,063 crore in January 2025, AMFI data showed.
Gold ETFs saw inflows of Rs 1,980 crore as against Rs 3,751 crore in January.
Debt funds saw outflows of Rs 6,525 crore in February, against inflows of Rs 1.28 lakh crore in January.
Overall, mutual funds saw inflows of over Rs 40,000 crore in February as compared to inflows of Rs 1.87 lakh crore in January.
Mutual fund inflows through systematic investment plans (SIPs) too have come down by 2% to a three-month low of Rs 25,999 crore in February, data showed.
On SIP numbers, Suranjana Borthakur, Head of Distribution & Strategic Alliances, Mirae Asset Investment Managers (India), said, “The SIP inflows have come down, but the drop is not significant, partly due to February being a shorter month. I believe investors should continue their SIP flows as it is a great time to accumulate units.”
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Commenting on the latest AMFI data, Nehal Meshram, Senior Analyst – Manager Research, Morningstar Investment Research India, “… the pace of investments moderated compared to the previous month due to increased market uncertainty and a broader correction in equities.”
“The escalation in global trade tensions and the Federal Reserve’s tightening stance triggered a risk-off sentiment, thus weighing on investor sentiments. Additionally, geopolitical tensions, slower domestic earnings growth, profit booking at high valuations, and continued FII outflows didn’t augur well for the markets,” she added.
While short-term headwinds have tempered investment flows, domestic investor confidence remains strong, as indicated by continued inflows, Meshram said. “Investors are adopting a cautious yet steady approach, reassessing their portfolios while maintaining long-term investment commitments.”
Equity fund flows remained consistent across all categories, underscoring the broad appeal of equity markets among investors, according to her.