Equity fund inflows stay strong at Rs 39,688 crore in Jan despite stock market pain: AMFI

BSE Sensex fell 1.28 percent, while NSE Nifty 50 slumped -0.99 percent during January.

Equity mutual fund inflows marginally fell 3.6 percent over the last month to Rs 39,687.78 crore in January, data released by the Association of Mutual Funds of India (AMFI) on February 12 showed.

The monthly inflows via systematic investment plan (SIP) stayed above the Rs 26,000 crore level in January. The SIP contribution during the month stood at Rs 26,400 crore against Rs 26,459 crore crore in December.

Earlier, open-ended equity mutual fund inflows had jumped 14.5 percent to Rs 41,155.91 crore in December, as thematic/sectoral and small-cap funds saw higher investments.

After January, net inflows into open-ended equity funds have stayed in the positive zone for the 47th month in a row.

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Speaking on the monthly data release, Venkat Chalasani, Chief Executive, AMFI said, “Assets under management (AUM) of the domestic mutual fund industry increased to Rs 67.25 lakh crore in January, which is a 27.52 percent growth year-on-year. Despite market volatility, SIP contributions remained robust, totalling Rs 26,400 crore for the month. We will continue to educate investors to stay invested through phases of volatility with a focus on disciplined, long-term approach to wealth creation.”

Equity funds

In the equity fund category, inflows into smallcap funds jumped 22.6 percent to Rs 5,720.87 crore in January, while midcap funds saw a marginal rise to Rs 5,147.87 crore. Further, net investments into largecap funds surged 52.3 percent to Rs 3,063.33 crore.

On the other hand, inflows into Sectoral/Thematic Funds plunged 41.2 percent to Rs 9,016.60 crore on a fall in the number of new fund offers launched during the month. Mutual funds mopped up Rs 2,838 crore via three Sectoral/Thematic Funds during January.

“January numbers came in a tad lower than December. Investor participation across various categories of schemes continues especially in largecap-oriented schemes. Increasing awareness of mutual funds as an efficient route for long-term wealth creation is demonstrated by investor behaviour who seem to be adding to investments through the SIP/STP route,” said Manish Mehta, National Head - Sales, Marketing & Digital Business, Kotak Mahindra Mutual Fund.

Debt funds

In the fixed-income category, debt mutual funds saw net inflows of Rs 1,28,652.58 crore in January against net outflows of Rs 1,27,152.63 crore in December.

The Liquid Fund category saw higher inflows at Rs 91,592.92 crore, followed by Rs 21,915.53 crore investments into Money Market Funds. Short Duration Fund and Gilt Fund segments saw net outflows of Rs 2,066.19 crore and Rs 1,359.66 crore, respectively.

"January flows indicate that investors are prioritising liquidity and flexibility over duration-heavy allocations, waiting for clearer signals on interest rate movements before making more strategic investments in long-duration debt. While the recovery in short-term categories underscores confidence in corporate liquidity cycles, the broader market sentiment remains selective, reflecting ongoing caution regarding macroeconomic conditions and interest rate policy shifts,” said Nehal Meshram, Senior Analyst – Manager Research, Morningstar Investment Research India.

Hybrid funds

Inflows into hybrid funds, which invest across equity, debt and commodity assets, jumped 100.6 percent to Rs 8,767.52 crore.

Arbitrage Funds saw the highest inflows at Rs 4,291.74 crore as against outflows of Rs 409.09 crore in December. Further, Multi Asset Allocation Fund saw investments worth Rs 2,122.85 crore, but net inflows slumped 17.6 percent month-on-month. Dynamic Asset Allocation/Balanced Advantage Fund witnessed investments worth Rs 1,512.06 crore during the month.

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Gold funds

The Gold Exchange-Traded Fund (ETF) category witnessed the highest monthly net inflow ever in January.

During the month, the category received net inflows of Rs 3,751.42 crore, which was sharply higher than net inflow of Rs 640 crore in December.

“The ongoing volatility in domestic and global equity markets heightened investors' risk aversion, leading many to seek refuge in gold ETFs, which are traditionally considered safe-haven assets. This shift was driven by concerns over economic uncertainties and geopolitical tensions,” said Himanshu Srivastava – Associate Director- Manager Research, Morningstar Investment Research India.

Moreover, expectations of further interest rate cuts by major central banks, including the U.S. Federal Reserve, increased the appeal of gold as a non-yielding asset. Lower interest rates reduce the opportunity cost of holding gold, making it a more attractive investment.

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Overall, open-ended mutual funds saw net inflows of Rs 1,87,606.23 crore in January against net outflows of Rs 80,509.20 crore in December.

The Indian mutual fund Industry’s net assets under management stood at Rs 67.25 lakh crore as against Rs 66.93 lakh crore in December.