- Which Categories Saw Inflows?
- Monthly Trends: Mixed Momentum
- Debt Funds Take a Big Hit
- What About ETFs and Index Funds?
- Conclusion
After falling 22% in August, net inflows into equity mutual funds declined for a second straight month, reaching ₹30,422 crore in September, a 9% drop from August’s ₹33,430 crore.
While equity inflows remained positive, debt mutual funds saw massive redemptions of ₹1.01 lakh crore, compared with an outflow of ₹7,979 crore in August.
Let’s take a closer look at where the money flowed, and where it didn’t.
Which Categories Saw Inflows?
Out of 11 equity fund subcategories, most saw inflows, except Dividend Yield and ELSS funds.
- Midcap funds attracted the highest investor interest with inflows of ₹5,085 crore, followed by Smallcap funds at ₹4,362 crore.
- Flexi cap funds also performed well with ₹7,029 crore in inflows, indicating continued investor preference for diversified equity exposure.
- Multi-cap funds saw inflows of ₹3,559 crore, while Large & Midcap funds brought in ₹3,805 crore.
- Value/Contra funds and Focused funds recorded ₹2,108 crore and ₹1,407 crore, respectively.
- Sectoral/Thematic funds saw the lowest positive inflows at ₹1,220 crore.
On the other hand,
- Dividend Yield funds witnessed outflows of ₹168 crore, and
- ELSS funds saw redemptions worth ₹308 crore.
Monthly Trends: Mixed Momentum
On a month-over-month (MoM) basis:
- Multicap funds saw an 11% rise in inflows.
- Large & Midcap funds rose 14%.
- Value/Contra funds jumped a sharp 85%, showing growing investor interest in undervalued opportunities.
- Focused funds also gained 22% MoM.
However, Sectoral/Thematic funds recorded a 69% decline in inflows, showing fading enthusiasm for theme-based investing in the short term.
Debt Funds Take a Big Hit
Debt mutual funds continued to struggle in September. The segment witnessed a massive ₹1.01 lakh crore outflow, with Liquid Funds (-₹66,042 crore) and Money Market Funds (-₹17,900 crore) leading the redemptions.
Other categories like Ultra Short Duration Funds (-₹13,606 crore) and Low Duration Funds (-₹1,253 crore) also saw withdrawals.
Only a few categories, such as Overnight Funds (+₹4,279 crore) and Medium to Long Duration Funds (+₹103 crore) managed to record positive flows.
This suggests that investors might be shifting away from short-term debt instruments amid changing liquidity conditions or awaiting clarity on interest rate movements.
What About ETFs and Index Funds?
Passive investment options continued to attract steady flows:
- Index Funds: ₹1,580 crore inflow
- FoFs investing overseas: ₹961 crore inflow
- Gold ETFs: surged 282% month-on-month to ₹2,189 crore
- Other ETFs and overseas FoFs grew 13% and 92%, respectively.
Overall, open-ended schemes recorded a net outflow of ₹42,815 crore in September, compared with an inflow of ₹52,501 crore in August.
Conclusion
While equity mutual funds continue to draw steady inflows, led by midcap, smallcap, and flexi-cap categories, the momentum has slowed for the second month in a row.
On the other hand, debt funds faced heavy redemptions, pulling down overall mutual fund flows into negative territory.
However, the continued interest in equity categories and the strong performance of passive funds like ETFs and index funds show that investor confidence in long-term investing remains intact.
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