Equity Mutual Fund Inflows Drop 21% in August 2025, Still Positive

Equity mutual fund inflows in India decreased by 21% month-on-month in August 2025, totaling Rs 33,430 crore. This drop, reported by the Association of Mutual Funds in India (AMFI) on September 10, followed a record Rs 42,702 crore in July. Despite this moderation, August marked the 54th consecutive month of positive inflows, demonstrating ongoing investor engagement in the equity market.

The overall assets under management (AUM) in the mutual fund sector fell slightly to Rs 75.18 lakh crore from Rs 75.35 lakh crore in July. This figure remains higher than the Rs 74.41 lakh crore recorded in June, aided in part by mark-to-market gains. The pace of new fund launches also slowed, with only 23 open-ended schemes raising Rs 2,859 crore, a significant decline from Rs 30,416 crore mobilized by 30 schemes in July.

On the debt side, open-ended funds experienced net outflows of Rs 7,980 crore, a notable improvement compared to the substantial withdrawal of Rs 1,06,801 crore in the previous month. Hybrid funds followed a similar trend, with inflows decreasing to Rs 15,293 crore from Rs 20,879 crore in July.

According to Himanshu Srivastava, Associate Director at Morningstar Investment Research India, August’s equity inflows reflect strong investor confidence. He noted, “The equity-oriented mutual fund categories witnessed robust inflows in August 2025, attracting Rs 33,430 crore in net investments. While this underscores sustained investor confidence in equities, the figure was notably lower than July’s record inflows.”

Investor behavior in August was largely driven by the consistent contributions from Systematic Investment Plans (SIPs). Retail investors remained committed to their allocations despite global market volatility. The overall optimism surrounding India’s economic prospects, bolstered by reforms such as GST rationalization and anticipated recovery in corporate earnings, enhanced domestic equity flows.

Market fluctuations during August created appealing entry points for investors, stimulating fresh investments. Srivastava added, “Diversification trends continued to shape investor behavior, with allocations spread across large-cap, mid-cap, and small-cap funds, and a clear tilt towards strategies with higher mid- and small-cap exposures.”

Flexi-cap funds emerged as the most favored category, achieving a new record inflow of Rs 7,679 crore in August, surpassing the previous month’s high of Rs 7,654 crore. Additionally, mid- and small-cap funds sustained significant interest, attracting Rs 5,331 crore and Rs 4,993 crore in net inflows, respectively.

The data suggests that while the pace of equity inflows has moderated, the sustained positive trend indicates resilient investor confidence in the long-term potential of the Indian equity market.