Inflows into equity mutual funds decline for third consecutive month amid market volatility
Mutual Funds Sahi Hain, the high-pitched campaign from the Association of Mutual Funds of India, rang a bell among Indians who took to mutual funds investing in a big way over the last few years. But, now net inflows into equity mutual funds have declined for the third consecutive month, an indication that investors may be turning more cautious amid the fall in equity markets over the last six months and the volatility that has set in, especially amid heightened geopolitical and trade tensions.
Latest AMFI data shows, that equity mutual fund schemes saw net inflows of ₹25,082 crore in March 2025, a fairly strong number, but lower than the inflows of ₹29,303 crore in February and ₹39,688 crore inflows in January 2025.
Sectoral and thematic schemes were impacted the most, where inflows declined sharply to just ₹170 crore in March, compared with ₹5,712 crore in February. Large cap funds saw inflows decline to ₹2,479 crore in March from ₹2,866 crore in February. Notably though, flows into midcap schemes were stable and flows into smallcap funds rose to ₹4,092 crore from ₹3,722 crore.
The decline in overall flows in equity schemes comes at a time when markets have been correcting over the past few months, with investors worried over the impact of reciprocal tariffs imposed by US President Donald Trump and rising chances of a recession in the US and global economy this year. Lackluster domestic earnings and slower economic growth have also weighed on market mood. As of Wednesday's close, the BSE Sensex was down 14 per cent from its record closing in September 2024.
Meanwhile, debt funds saw outflows of ₹2.03 lakh crore in March, with sizeable outflows of ₹1.33 lakh crore from liquid funds and another ₹30,000 crore outflows from overnight funds. Corporates typically park money in these schemes and would have redeemed them in March for tax payments and other purposes end of the quarter.
Hybrid schemes, which had seen inflows of about ₹6,804 crore in February, saw outflows of ₹947 crore in March. Other schemes, primarily including exchange-traded funds (ETF) and index funds, on the other hand, saw inflows rise to ₹14,149 crore in March from ₹10,249 crore in February.
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