In March, net investments in equity-centric mutual funds surged by 56% from the previous month, reaching Rs 40,450 crore, marking the highest level since July 2025, according to data from the Association of Mutual Funds in India (AMFI).
Conversely, mutual funds focused on debt experienced significant outflows, totaling Rs 2.95 lakh crore during the same period. Overall, the mutual fund sector recorded net outflows of Rs 2.40 lakh crore, a stark contrast to the inflows of Rs 94,530 crore observed in the prior month.
The inflows from systematic investment plans (SIPs) in mutual funds hit an all-time high of Rs 32,087 crore in March, an increase from Rs 29,845 crore in February. It is worth noting that February had fewer days, which may have influenced these figures.
Among the categories of equity funds, flexi-cap funds emerged as the leading segment, with inflows rising by 45% to Rs 10,054 crore. Additionally, mid-cap and small-cap funds recorded inflows of Rs 6,063 crore and Rs 6,263.56 crore, reflecting increases of 51% and 61%, respectively. Most other categories, with the exception of sectoral and thematic funds, also saw growth in inflows during the month. Nonetheless, the average assets under management (AUM) for equity mutual funds declined from Rs 35.6 lakh crore to below Rs 32 lakh crore, largely due to a significant downturn in the equity markets during that period.
During March, the benchmark Sensex index dropped by more than 11% as geopolitical tensions in West Asia and rising crude oil prices negatively impacted investor confidence. Nitin Agrawal, CEO of mutual funds at InCred Money, commented, “While the reported net outflow of Rs 2,39,910 crore and the decline in AUM may alarm investors, these figures can be misleading if viewed in isolation. The drop in AUM reflects a market valuation adjustment due to a sharp equity market correction rather than a lack of confidence. The net outflow is primarily attributed to redemptions from debt funds, a common occurrence at the end of the quarter in March.” He further noted that flexi-cap funds have gained traction as the leading segment for inflows, underscoring the significance of diversification across various market capitalizations amid heightened volatility. Mid-cap and small-cap segments also showed substantial growth, indicating potential value buying opportunities.
Meanwhile, investments in gold and silver exchange-traded funds (ETFs) remained subdued after achieving record levels in January, where they had outperformed equity funds. Gold ETFs attracted inflows of Rs 2,266 crore in March, a decrease from Rs 5,255 crore in February and a peak of Rs 24,040 crore in January. Outflows from silver ETFs also lessened, falling to Rs 684 crore from Rs 826 crore in the previous month.
Agrawal from InCred remarked, “The decline in Gold ETF inflows suggests a renewed optimism regarding equities.”
In contrast, investments in other ETFs saw a remarkable increase, quadrupling to Rs 19,802 crore, with index funds experiencing inflows that nearly tripled to Rs 8,169 crore. Kunal Rambhia, a fund manager and trading strategist at The Streets, noted that investors are increasingly shifting their focus back to equity ETFs.
