Index Fund Corner
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| Scheme Name | 1-Year Return | Invest Now | Fund Category | Expense Ratio |
|---|---|---|---|---|
| Axis Nifty 50 Index Fund | +32.80% | Invest Now | Equity: Large Cap | 0.12% |
| Axis Nifty 100 Index Fund | +38.59% | Invest Now | Equity: Large Cap | 0.21% |
| Axis Nifty Next 50 Index Fund | +71.83% | Invest Now | Equity: Large Cap | 0.25% |
| Axis Nifty 500 Index Fund | — | Invest Now | Equity: Flexi Cap | 0.10% |
| Axis Nifty Midcap 50 Index Fund | +46.03% | Invest Now | Equity: Mid Cap | 0.28% |
According to data from the Association of Mutual Funds in India (AMFI), this was a 14% decline from February, largely due to lower participation in sectoral NFOs, increased profit booking, and higher redemptions—particularly in large-cap and thematic funds.
Despite a 4% month-on-month rise in gross subscriptions, redemptions surged 25%, sharply impacting net equity flows.
“What would take most market participants by surprise is that redemptions went up most in large caps—54% higher than last month—followed by sectoral and thematic funds at 55%,” said Akhil Chaturvedi, Executive Director & Chief Business Officer, Motilal Oswal AMC.
“Volatility could not even save Balanced Advantage Funds, which saw a 30% increase in redemptions compared to February,” he said.
Key factors behind the fall in net equity inflows
Drop in NFO activity
New Fund Offerings (NFOs), which had driven substantial flows earlier in the financial year, saw a slowdown. Only four equity NFOs—Samco Large Cap Fund, Helios Mid Cap Fund, Mahindra Manulife Value Fund, and Motilal Oswal Active Momentum Fund—were launched and concluded in March.
“This sharp reduction in NFOs, especially in the sectoral and thematic segments, significantly impacted inflows,” said Nehal Meshram, Senior Analyst, Morningstar Investment Research India.
Profit booking
March being the end of the financial year saw heightened profit booking across categories. Investors looked to lock in gains, particularly in long-duration debt and equity funds following strong market performance in earlier months.
“Profit booking was a major contributor. April outflows will be a better indicator to gauge sentiment,” said Chaturvedi. “We believe redemptions will moderate going forward.”
Global volatility and trade tensions
Rising concerns around US tariffs—especially in technology and manufacturing—led to market volatility, prompting cautious investor behaviour.
“Fears of a renewed global trade conflict, inflationary pressures, and supply chain disruptions have prompted investors to reassess risk exposure, particularly in emerging markets like India,” added Meshram.
Increased redemptions in large-cap and thematic funds
Large-cap funds saw outflows of ₹2,479 crore. Mid-cap inflows dropped to ₹1,017 crore, down 86% from February. Small-cap fund inflows remained resilient at ₹2,922 crore, supported by lower redemptions (down 15% month-on-month).
Balanced Advantage Funds (BAFs), usually seen as a cushion during volatile markets, weren’t spared either.
“BAFs saw a 30% rise in redemptions, although still lower than the peak redemption months of April to October 2024,” Chaturvedi noted.
Year-end tax planning lifted ELSS and dividend yield funds
Amid the broader moderation, some categories held firm.
ELSS funds saw inflows rise to ₹735 crore, up from ₹615 crore in February, boosted by tax-saving demand.
Dividend yield funds also attracted strong inflows as investors sought lower-risk, income-generating equity exposure.