Equity Mutual Fund Inflows Surge by 14.5% in December 2024

Equity mutual funds experienced a robust 14.5% increase in inflows in December 2024, according to data released by the Association of Mutual Funds in India (AMFI). The total inflow during the month reached ₹41,155 crore, compared to ₹35,943.4 crore in November. This marks a significant milestone for the mutual fund industry, highlighting sustained investor interest in equities.

The surge was primarily driven by sectoral and thematic funds, which saw inflows more than double to ₹15,331.5 crore, compared to ₹7,658 crore in November. Another major contributor to this growth was new fund offers (NFOs), which raised ₹13,852 crore in December. 33 new open-ended schemes were launched while one close-ended fund in December. 

While sectoral funds gained significant traction, other categories saw mixed performance. Large-cap funds reported a drop in inflows, recording ₹2,010 crore in December, down from ₹2,547 crore in the previous month. Mid-cap funds, however, showed modest growth, with inflows increasing to ₹5,093 crore from ₹4,883.4 crore. Similarly, small-cap funds recorded a 13.5% rise in inflows, reaching ₹4,667 crore compared to ₹4,111 crore in November.

Equity-linked savings schemes (ELSS), often a preferred choice for tax-saving investments, witnessed a steep decline, with inflows plunging to ₹188 crore in December from ₹618.5 crore in November. Exchange-traded funds (ETFs) also saw a downturn, with inflows dropping to ₹784.3 crore from ₹1,531.2 crore.

The debt fund category faced significant challenges during the month. Overall outflows from debt mutual funds totaled ₹1.27 lakh crore in December, a sharp contrast to the ₹12,915 crore inflow seen in November. Liquid funds saw the largest outflow at ₹66,532 crore, contributing significantly to the decline. Among debt fund subcategories, only medium-to-long-duration, gilt, and long-duration funds managed to attract inflows. This shift in sentiment may be stemming from ongoing market volatility and concerns about interest rate movements.

Despite the challenges in the debt segment, systematic investment plans (SIPs) continued their upward trajectory. Contributions to SIPs hit a record in December, marking an impressive 50% year-on-year growth. This represents the 17th time in 18 months that SIP contributions have reached an all-time high, highlighting their growing popularity among retail investors.

At the end of December 2024, the mutual fund industry’s total Assets Under Management (AUM) stood at ₹66.93 lakh crore, a decline from ₹68.08 lakh crore in November. 

“Despite volatile market conditions, equity-oriented schemes continued to see strong inflows. This behaviour highlights the growing maturity of investors. The SIP contribution reached an all-time high of ₹26,459.49 crore in December 2024 reflecting investors' steadfast commitment to their financial goals. The record-breaking 22.50 crore mutual fund folios in December underscores investors’ confidence in the industry's ability to deliver long-term value despite short-term fluctuations,” said Venkat Chalasani, Chief Executive of AMFI.

 
In Conclusion

December 2024 showcased a mixed bag for the mutual funds industry. Equity mutual funds continued to attract robust inflows, supported by strong NFO performance and rising SIP contributions. However, the substantial outflows from debt funds underscore the need for caution among investors. Looking ahead, the mutual fund landscape remains dynamic, with sectoral opportunities and SIPs emerging as key growth drivers.