12th April 2025 (11 Topics)

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Equity Inflow Dips

Context

In March 2025, India's mutual fund industry witnessed a notable shift in investor behavior. While the overall Assets Under Management (AUM) grew, equity mutual funds experienced a decline in net inflows, marking the third consecutive month of reduced investments in this category.

Key-highlights (India’s mutual fund industry)

Overall Growth: The total Assets Under Management (AUM) rose by 23.11% year-on-year to Rs 65.74 lakh crore, indicating a growing investor base and market appreciation.?
Equity Mutual Funds: Net inflows into equity mutual funds declined by 14.4% month-on-month to Rs 25,082 crore, marking the lowest in 11 months. This decrease is attributed to profit booking, year-end redemptions, and market volatility influenced by global tariff concerns.
Systematic Investment Plans (SIPs): SIP contributions remained robust atRs.25,926 crore, showing a 34.53% year-on-year increase. However, there was a slight month-on-month dip from February'sRs.25,999 crore. The number of SIP accounts decreased marginally from 10.16 crore to 10.05 crore, with a stoppage ratio rising to 127.5% from 122% in February.
Fund Categories Performance:
- Large-Cap Funds: Experienced net outflows ofRs.2,479 crore, despite an increase in AUM from Rs 3.25 lakh crore to Rs 3.59 lakh crore, primarily due to market gains.
- Mid and Small-Cap Funds: Continued to attract investors, with inflows of Rs 3,439 crore andRs.4,092 crore respectively, indicating sustained retail enthusiasm in these segments.
- Sectoral/Thematic Funds: Saw a significant drop in net flows toRs.170 crore fromRs.5,712 crore in February, possibly due to increased market volatility and underperformance in certain sectors.
Gold ETFs: Recorded net outflows ofRs.77 crore, a reversal from theRs.1,980 crore inflows in February. This shift is largely attributed to profit booking and portfolio rebalancing strategies among investors.

Fact Box:

Key Concepts

Mutual Fund: It is an investment vehicle pooling money from multiple investors to invest in diversified assets like equities, stocks, bonds, government securities.
- It is an investment portfolio managed by a professional organization known as an asset management company (AMC).
- Mutual funds are regulated by SEBI through a strong regulatory framework.
Assets Under Management (AUM): AUM refers to the total market value of all investments managed by a financial institution, entity, or individual on behalf of investors.
Systematic Investment Plan (SIP): It is a method of investing fixed amounts regularly in mutual funds, promoting disciplined investing.?
Equity Funds: Also known as stock funds, they are mutual funds that invest primarily in stocks, aiming for capital growth.?
Large-Cap, Mid-Cap, Small-Cap Funds: Market capitalization (or market cap) is the total value of a company’s shares on the stock market. Based on this, companies are classified into:
- Large-Cap Funds: These funds invest in large, well-established companies that are ranked in the top 100 by market capitalization. These companies are known as blue-chip companies, with a market value of Rs 20,000 crores or more.
- Mid-Cap Funds: These funds invest in medium-sized companies, ranked 101 to 250 by market capitalization. The market value is between Rs 5,000 crores and Rs 20,000 crores.
- Small-Cap Funds: These funds invest in smaller companies, ranked 251 and below by market capitalization. The market value is below Rs 5,000 crores.
Gold ETFs: Gold ETF is an exchange-traded fund (ETF) that aims to track the domestic physical gold price. They are passive investment instruments that are based on gold prices and invest in gold bullion.

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Equity Inflow Dips

Key-highlights (India’s mutual fund industry)

Fact Box: