MF inflows hit 5-month high in September as equity funds draw Rs 38,306 crore

Inflows into equity mutual funds reached a five-month high in September as investors continue to pour money in the domestic market despite its high volatility. However, heavy withdrawals from debt schemes pulled overall mutual fund flows into negative territory.

Net inflows into equity mutual funds stood at ₹38,306.55 crore, the highest since April and up 31 per cent from ₹29,328.62 crore in August. The growth was largely driven by mid-cap and small-cap funds which shows inflows of ₹7834.84 crore and ₹9038.57 crore respectively during the month.

“The sustained interest in these categories, despite the correction in broader markets, suggests that investors continue to remain confident about the long-term growth potential of emerging businesses. However, given the elevated valuations in certain pockets of the market and the inherently higher volatility associated with these segments, investors need to remain mindful of the risks involved,” said Himanshu Srivastava, principal manager, research, Morningstar Investment Research India.

“We also see investors reallocating with intent. Hybrid funds saw outflows as money moved towards pure equity. In the ETF space, gold inflows rose to about ₹4,500 crore, among the highest in recent times, which reflects a steady, allocation-led approach to commodities amid global uncertainty,” said

Suranjana Borthakur, head of distribution & strategic alliances, Mirae Asset Mutual Fund.

However, debt mutual funds recorded net outflows of ₹1,83,155.76 crore, compared with outflows of ₹8,127.32 crore in the previous month.

“The decline was overwhelmingly driven by liquidity-oriented categories, suggesting quarter-end treasury adjustments and institutional cash-management activity rather than a broad-based deterioration in investor appetite for fixed income,” said Nehal Meshram, senior analyst, Morningstar Investment Research India.

Overall, the mutual fund industry reported net outflows of ₹1,33,214.25 crore in September, against net inflows of ₹41,368.05 crore in August.

“Mutual fund industry AUM declined 5.1 per cent month-on-month to ₹82.64 lakh crore in September, primarily due to mark-to-market (MTM) losses and outflows from debt funds. Equity mutual funds marked the 67th consecutive month of positive inflows. SIP contributions stood at ₹32,490 crore, with 10.06 crore contributing SIP accounts during the month, reflecting continued investor participation in systematic investing,” said Venkat Chalasani, chief executive, AMFI.