The Indian mutual fund industry saw outflows of Rs 66,591 crore in the month of December due to outflows of Rs 1,32,410 from debt schemes and a 6.2% decline in inflows into equity schemes. This was the first time that the industry saw a fall in inflows into equity mutual funds since 2020 when there was global chaos due to the pandemic.
SIP Resilience Amidst Equity Moderation
Meanwhile, inflows through Systematic Investment Plans (SIPs) hit a new high of Rs 31,002 crore and accounted for 20.7% of total mutual fund assets.
Venkat Chalasani, AMFI chief executive, said that the moderation in assets under management from November’s Rs 80.80 lakh crore to Rs 80.23 lakh crore in December was primarily driven by debt fund outflows for liquidity management and limited market-related valuation changes.
Inflows into equity schemes fell to Rs 28,054 crore in December. All the categories saw a decrease in inflows except the flexicap which saw 23% month on month increase in inflows to Rs 10,019.27 crore.
Himanshu Srivastava, Principal Research, Morningstar Investment Research India, said moderation in flows could be attributed to the cooling momentum in the mid-cap and more specifically in the small-cap category, during the month, where inflows tapered after a strong run-up in valuations and periodic market corrections.
“Additionally, markets remained volatile during the period, prompting investors to capitalize on profit-booking opportunities as and when they arose,” he said and added flexi-cap funds witnessed a sharp pickup in inflows, reflecting investor preference for strategies that offer allocation flexibility across market capitalisations amid evolving market conditions.
However, the category saw a launch of a new fund – Abakkus Flexi Cap Fund, which garnered net assets worth Rs 2,468 crores. Inflows into largecap schemes fell 4.4% to Rs 1,567 crore, midcap 6.9% to Rs 4,176 crore, small cap 13.2% Rs 3,824 crore, and thematic by 49.3% to Rs 946 crore. Srivastava added that moderation in inflows to sectoral and thematic funds reflects some cooling of momentum in existing thematic strategies.
Meanwhile, passives and overseas fund of fund schemes saw a rise in saw a 73.7% jump in inflows to Rs 26,723 crore driven by a 210% rise in gold ETFs inflow. Kartik Jain, MD & CEO, Shriram AMC, said ETFs and Gold ETFs witnessed robust inflows, pointing to tactical allocation and hedging strategies by investors.
Flexi-Caps and Passives Gain Ground
Inflows into equity funds fell from Rs 3.94 lakh crore to Rs 3.5 lakh crore. This year’s fall was because of a 75.5% fall in sectoral and thematic funds from Rs 1.56 lakh crore in 2024 to Rs 38,145 crore. Inflows into large cap schemes rose 31.3% in 2025, midcaps by 45.6%, and small caps 52.9%. Flexicap inflows almost doubled to Rs 80,979 crore, an all-time high.
That into debt schemes fell 25.6% in 2025 to Rs 1.2 lakh crore, while gold and silver ETFs saw a sharp rise of 282.7% and 174% respectively to Rs 42,962 crore and Rs 23,472 crore respectively. Inflows through SIPs rose 24.8% to Rs 3.35 lakh crore. Ovas Bakshi, Head-Retail Sales, Kotak Mahindra AMC said, “This year, with large caps outperforming mid and small caps, flows have been more concentrated in the flexi-cap category. Multi-Asset funds have also witnessed strong inflows as these funds can invest in Equity, Debt & Commodities.”