Hybrid funds see surge in January on strong arbitrage flows
Hybrid mutual funds saw a decent rise in inflows in January 2025, driven primarily by arbitrage funds. The latest Association of Mutual Funds in India (AMFI) data shows that hybrid funds received flows of ₹8,767.5 crore as compared to ₹4,370 crore flows of December.
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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% |
This reflects growing investor confidence in balanced allocation strategies.
Arbitrage funds drive growth
Arbitrage Funds saw the highest inflows at ₹4,291.74 crore as against outflows of ₹409.09 crore in December.
These funds, which exploit price differences between cash and futures markets, gained traction as investors sought stable returns amid market volatility.
Investor trends and preferences
Suranjana Borthakur, Head of Distribution & Strategic Alliances at Mirae Asset Investment Managers (India), noted that investor confidence remains strong despite market corrections.
Large-cap and flexi-cap funds saw an increase in inflows, rising from ₹2,000 crore to ₹3,000 crore and ₹4,700 crore to ₹5,600 crore, respectively. Hybrid fund inflows followed suit, largely due to the surge in arbitrage allocations.
Mid-cap fund flows remained stable, while small-cap funds continued to attract interest.
The Equity-Linked Savings Scheme (ELSS) category also gained traction as investors focused on long-term wealth creation and tax benefits.
On the other hand, Multi Asset Allocation Fund saw investments worth ₹2,122.85 crore, but net inflows slumped 17.6% month-on-month.
Dynamic Asset Allocation/Balanced Advantage Fund witnessed investments worth ₹1,512.06 crore during the month.
Retail participation remains strong
Retail investor participation remained high. Mutual fund folios in equity, hybrid, and solution-oriented schemes increased to 18.22 crore in January from 17.89 crore in December.
However, retail AUM in these categories fell slightly to ₹38.77 lakh crore from ₹39.91 lakh crore due to market fluctuations.
Growing interest in safer assets
Amid geopolitical uncertainties and budget expectations, investors also turned to safer assets.
Gold ETFs saw higher inflows, reflecting a cautious approach to market volatility.
Looking ahead
Industry experts advise maintaining a well-balanced portfolio with a mix of equity, hybrid, and debt funds.
With SIP inflows exceeding ₹26,000 crore, investor discipline remains strong, reinforcing the long-term approach to wealth creation.
As hybrid funds continue to gain traction, arbitrage strategies are expected to remain a preferred choice for investors seeking stability with returns, experts say.