Equity Mutual Fund Inflows Remain Strong at ₹39,688 Crore in January Despite Market Volatility

Despite continued volatility in the Indian stock markets, equity mutual fund inflows remained robust at ₹39,688 crore in January 2025, as per data released by the Association of Mutual Funds in India (AMFI). This marks a marginal decline of 3.6% compared to December 2024 but still signifies strong investor confidence in the equity markets.

While systematic investment plan (SIP) contributions remained above ₹26,000 crore, market volatility led to shifts in sectoral fund inflows, hybrid fund performance, and gold ETF demand. The Indian mutual fund industry’s total assets under management (AUM) rose to ₹67.25 lakh crore, reflecting a 27.52% year-on-year growth.

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Equity Mutual Fund Performance in January 2025

1. SIP Contributions Remain Resilient

Despite market fluctuations, SIP contributions stood at ₹26,400 crore, slightly lower than December’s ₹26,459 crore but still at historically high levels. This underscores the growing trend of long-term disciplined investing among Indian investors.

2. Small- and Mid-Cap Funds Continue to Attract Investors

• Small-cap fund inflows surged 22.6% to ₹5,720.87 crore, indicating continued investor interest in high-growth companies despite valuation concerns.
• Mid-cap fund inflows remained stable at ₹5,147.87 crore, reflecting sustained confidence in medium-sized companies.
• Large-cap fund inflows surged by 52.3% to ₹3,063.33 crore, as investors sought safer options amid stock market volatility.

3. Sectoral/Thematic Fund Inflows Decline Sharply

While equity inflows remained strong overall, Sectoral/Thematic funds witnessed a steep decline of 41.2%, with net investments falling to ₹9,016.60 crore. The drop is primarily attributed to a lower number of new fund launches in January.

Debt Mutual Fund Performance: Return of Inflows

1. Debt Fund Inflows Rebound Strongly

After witnessing outflows of ₹1.27 lakh crore in December, debt mutual funds saw strong net inflows of ₹1.28 lakh crore in January, driven by increased demand for short-duration funds.

2. Liquid Funds Lead the Surge

• Liquid Funds attracted the highest inflows at ₹91,592.92 crore, as investors prioritized liquidity and flexibility amid market uncertainties.
• Money Market Funds saw ₹21,915.53 crore in inflows, highlighting investor preference for short-term investments with stable returns.
• Short Duration and Gilt Funds faced net outflows of ₹2,066.19 crore and ₹1,359.66 crore, as investors waited for more clarity on interest rate movements.

3. Expert Insights on Debt Fund Trends

“January flows indicate that investors are prioritizing liquidity over long-duration debt allocations, given uncertainty in interest rate movements. The rise in short-term category inflows underscores confidence in corporate liquidity cycles, even as caution remains regarding broader macroeconomic conditions,” said Nehal Meshram, Senior Analyst at Morningstar Investment Research India.

Hybrid Fund Inflows Double in January

Hybrid funds, which invest across equity, debt, and commodities, witnessed a significant 100.6% jump in inflows to ₹8,767.52 crore in January.

Arbitrage Funds led the category with ₹4,291.74 crore in inflows, reversing the previous month’s outflows of ₹409.09 crore.
Multi Asset Allocation Funds attracted ₹2,122.85 crore, but inflows were down 17.6% month-on-month.
Dynamic Asset Allocation/Balanced Advantage Funds saw ₹1,512.06 crore in inflows, signaling steady investor interest in balanced portfolios.

Gold ETF Inflows Reach All-Time High Amid Market Volatility

Gold Exchange-Traded Funds (ETFs) emerged as the biggest beneficiaries of global uncertainty, attracting a record net inflow of ₹3,751.42 crore in January, compared to ₹640 crore in December.

Key Factors Driving Gold ETF Demand

• Stock market volatility pushed investors towards safe-haven assets.
• Concerns over geopolitical tensions and economic slowdown increased gold’s appeal.
• Lower interest rate expectations globally, especially in the US, made gold a more attractive investment.
• Himanshu Srivastava, Associate Director at Morningstar Investment Research India, noted:
• “The volatility in equity markets and growing risk aversion led many investors to shift to gold ETFs, reinforcing gold’s reputation as a safe-haven asset.”

Conclusion

Overall, the Indian mutual fund industry recorded net inflows of ₹1.87 lakh crore in January, reversing the ₹80,509 crore outflows seen in December.

• Equity fund inflows remained strong at ₹39,688 crore, highlighting investor resilience.
• Debt funds saw massive inflows of ₹1.28 lakh crore, as liquidity took precedence.
• Gold ETFs hit record-high inflows, as investors sought safer alternatives.
• Despite short-term volatility, investor participation continues to rise across categories, demonstrating increasing awareness and confidence in mutual fund investments.