Mutual Fund inflows ease for second month, equity inflows at Rs 30,422 crore in September

Equity mutual fund inflows fell 9% month-on-month to ₹30,422 crore in September, marking the second consecutive month of moderation after July’s record high, according to industry data. Despite softer inflows, the mutual fund industry’s total assets under management (AUM) inched up 0.57% to Rs 75.35 lakh crore from Rs 74.93 lakh crore in August, reflecting continued investor confidence in equities and diversification.

Nehal Meshram, Senior Analyst – Manager Research, Morningstar Investment Research India, said the slowdown was cyclical rather than structural.

“Equity-oriented mutual fund categories recorded net inflows of Rs 30,422 crore in September 2025, marking the second consecutive month of moderation after July’s record tally of Rs 42,703 crore and August’s Rs 33,430 crore. While the pace softened, the overall trend continues to reflect sustained investor confidence in equities, supported by steady SIP contributions and retail participation,” she noted.

Flexi-cap funds led inflows at Rs 7,029 crore, followed by midcap funds with Rs 5,085 crore and smallcap funds with Rs 4,363 crore. Large- and midcap funds attracted Rs 3,805 crore, while large-cap funds saw moderate inflows of Rs 2,319 crore. Sectoral and thematic funds witnessed inflows of Rs 1,220 crore, aided partly by a new fund launch, though enthusiasm eased compared to earlier months. ELSS funds saw mild outflows of Rs 308 crore, and dividend yield funds recorded withdrawals of ₹168 crore.

Meshram said investors remained resilient despite market volatility and global uncertainties.

“The moderation in flows comes after exceptionally strong months in July and August. Persistent SIP momentum and selective participation across categories reflect continued conviction in long-term wealth creation through equities,” she added.

Within equity categories, inflows were broadly positive except for dividend yield and ELSS funds. Value/contra and focused funds saw strong month-on-month gains, rising 85% and 22%, respectively, while sectoral and thematic funds lagged.

Hybrid mutual funds also slowed, with inflows down 39% to ₹9,397 crore from ₹15,293 crore in August. Multi Asset Allocation funds led the segment with ₹4,982 crore, up 41%, followed by aggressive hybrid funds with ₹2,013 crore.

Anand Vardarajan, Chief Business Officer, Tata Asset Management, said equity flows remained steady despite flat market performance.

“Flexicap, midcap, and smallcap funds continued to see strong traction, while sectoral and thematic funds have been losing steam. Precious metals, especially gold and silver, performed well, with flows into gold nearly quadrupling in September to around ₹8,300 crore as investors sought safety and diversification,” he said.

Debt mutual funds faced heavy outflows of ₹1.01 lakh crore, led by liquid funds, which saw withdrawals of ₹66,042 crore. Only overnight, medium-to-long duration, long-duration, and dynamic bond funds recorded net inflows.

Meanwhile, passive investment vehicles such as index funds and ETFs recorded a 67% rise in inflows to ₹19,056 crore, with gold ETFs leading the surge.

Despite mixed trends across asset classes, the modest rise in total AUM underscores the resilience of the mutual fund industry, supported by retail participation, steady SIP flows, and growing interest in passive and diversified investment strategies.