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The Indian mutual fund industry witnessed a remarkable surge in net equity inflows during June, reaching a record high of over Rs 42,700 crore, according to data released by the Association of Mutual Funds in India (AMFI) on August 11th. This figure represents an impressive 81% increase compared to the Rs 23,568 crore recorded in the preceding month of May, signifying a strong resurgence in investor confidence and appetite for equity investments. This positive trend also marks the 53rd consecutive month of positive flows into equity schemes, demonstrating sustained investor faith in the long-term growth potential of the Indian stock market. The surge in inflows was broad-based across most equity categories, indicating that investors were not just focused on specific sectors or market segments but were instead adopting a more diversified approach to their equity allocations. This widespread participation is a healthy sign for the overall stability and resilience of the mutual fund industry. Furthermore, the robust performance of the equity markets and the consistent inflows have contributed to a significant increase in the overall assets under management (AUM) of the mutual fund industry. As of July, the industry's AUM reached an all-time high of Rs 75.35 lakh crore, a substantial increase from Rs 74.41 lakh crore in June, Rs 72.20 lakh crore in May, and Rs 69.99 lakh crore in April. This growth in AUM reflects the combined effect of fresh inflows and mark-to-market (MTM) gains on existing equity holdings. The increase in equity inflows can be attributed to a number of factors, including a stable macroeconomic environment, positive corporate earnings growth, and increasing awareness among retail investors about the benefits of investing in mutual funds through systematic investment plans (SIPs). The mutual fund industry has also been actively promoting financial literacy and educating investors about the importance of long-term investment strategies. According to Manish Mehta, National Head - Sales, Marketing & Digital Business, Kotak Mahindra AMC, equity (including hybrid) net sales zoomed to more than Rs 45000 crores in July 2025 (note: year appears to be a typo, likely intended to be 2023). Series of new fund offers and SIP inflows lead to this high number. Domestic investors continue to keep their faith in mutual fund schemes and SIPs. The distribution community continue to educate the investors on long term benefits of staying invested in mutual funds and use SIPs as an effective medium of equity investing. This highlights the critical role played by distributors in guiding investors and promoting the adoption of SIPs as a disciplined and effective way to invest in equities. Retail participation in mutual funds also witnessed significant growth, with the total number of mutual fund folios rising to 24.57 crore in July from 24.13 crore in June. This increase in folios indicates that more and more individual investors are recognizing the benefits of investing in mutual funds, such as diversification, professional management, and liquidity. The growth in retail participation is particularly encouraging as it suggests that the mutual fund industry is becoming more inclusive and accessible to a wider range of investors.
A closer look at the performance of different equity fund categories reveals that small-cap schemes witnessed the largest increase in inflows, attracting Rs 6,484.43 crore in July compared to Rs 4,024 crore in June, representing a substantial increase of around 61%. This indicates that investors are becoming more comfortable with taking on higher levels of risk in pursuit of potentially higher returns. Flexicap funds, which offer investors the flexibility to invest across market capitalizations, also saw significant inflows of Rs 7,654.33 crore in July, up 33% from Rs 5,733 crore in June. This suggests that investors are seeking diversified investment options that can adapt to changing market conditions. Midcap funds attracted Rs 5,182.49 crore, which is 38% higher than June’s figure of Rs 3,754 crore. Large and midcap funds saw inflows of Rs 5,034.71 crore, more than doubling from Rs 2,026 crore in June. Largecap funds, which invest primarily in the stocks of the largest companies, saw a more modest increase in inflows, rising to Rs 2,125.09 crore from Rs 1,630 crore, up 30% over the month. Sectoral and thematic funds, which focus on specific industries or investment themes, registered the largest absolute gain, pulling in Rs 9,426.03 crore in July versus Rs 8,224 crore in June, representing a rise of about 15% over the month. However, ELSS schemes continued to record net outflows, although the Rs 368.18 crore withdrawn in July was an improvement over an outflow of Rs 556 crore seen in June. This could be attributed to investors redeeming their ELSS investments after the mandatory lock-in period of three years. The hybrid funds category saw inflows of Rs 20,879 crore in July, slightly lower than the Rs 23,223 crore recorded in June. Arbitrage funds, which seek to profit from price differences in different markets, showed Rs 7,295 crore against 15,584 crore inflows in June. This decline could be due to reduced arbitrage opportunities in the market.
In addition to equity and hybrid funds, debt funds also witnessed strong inflows in July. Open-ended debt funds posted net inflows of Rs 1,06,801 crore. Liquid Funds saw inflow of Rs 39,354 crore vs outflow of Rs 25,196 crore in June. Short Duration Fund saw an inflow of Rs 1,829 compared to Rs 10,277 crore in June. Money Market Fund saw an inflow of Rs 44,573 crore vs Rs 9,484 crore in June. Similarly, Corporate Bond Funds witnessed Rs 1,421.57 crore against Rs 7,124 crore in June. This indicates that investors are also seeking to allocate capital to fixed-income assets to balance their overall portfolio risk. Gold ETFs recorded inflows of Rs 1,256 crore in July vs Rs 2,080.9 crore in June. Other ETFs saw inflows of Rs 4,476 crore from Rs 844 crore in June. In conclusion, the Indian mutual fund industry experienced a strong surge in inflows across various asset classes in July, driven by renewed investor confidence, a stable macroeconomic environment, and increasing awareness about the benefits of mutual fund investing. The record high AUM and the growth in retail participation are positive indicators for the future growth and development of the industry. However, investors should carefully consider their risk tolerance and investment objectives before making any investment decisions.
Source: Strong surge in net equity inflow for June at a record high of over Rs 42,700 crore, shows AMFI data