Despite correction, the MF industry sees strong inflows

Amidst the period of market correction, the mutual fund industry has witnessed strong inflows across scheme categories. 

Equity, debt and hybrid schemes have registered net inflows in January.

Despite the strong inflows in the industry, the overall average assets under management (AUM) of the industry has declined by 1.8% to Rs 67.77 lakh crore in January 2025 compared to the AUM of Rs 69.05 lakh crore in December 2025. Experts say that the decline in the AUM is because of the decline in the market.

Here are the key trends that the mutual fund industry has witnessed in the first month of calendar year 2025.

• Total inflow in equity is at Rs. 39,688 crore
• Sectoral and thematic schemes have witnessed the highest inflows of Rs. 9,017 crore
• Small cap funds have witnessed the second highest inflow of Rs.5700 crore, highest across all schemes
• Not so far behind are flexi cap and mid-cap funds, which have registered high inflows of Rs. 5.698 crore and Rs. 5,148 crore, respectively 
• The large-cap funds have seen net inflows of Rs. 3,063 crore
• The debt funds have witnessed inflows of Rs. 1.28 lakh crore largely due to liquid funds, overnight funds and money market funds
• The inflows in the debt funds was dominated by liquid funds, money market funds and overnight funds and stood at Rs. 91,593 crore, Rs. 21,916 crore and Rs. 18,937 crore, respectively
• Hybrid schemes have recorded net inflows of Rs. 8,768 crore
• Passive funds have also witnessed net inflows of Rs. 10,255 crore
• Among passives, gold ETFs have recorded inflows of Rs. 3,751 crore. Also, the AUM of gold ETFs crossed the Rs.50 k mark to reach s. 52,000 crore 
• 12 NFOs were launched in January and raised Rs. 4,544 crore
• The SIP inflows have remained strong in January by receiving gross inflows of Rs. 26,400 crore 
• The number of SIP accounts has also witnessed negative growth and stood at 10.27 crore accounts as of January 2025 compared to 10.32 crore accounts in December 2024

Akhil Chaturvedi, Executive Director & Chief Business Officer, Motilal Oswal AMC, said, “Investor sentiment has been upbeat in a month when there has been heightened volatility and correction led by FII’s selling pressure. We have seen stable net flows of 40,000 crore and a marginal decline in SIP block. Interestingly, there is a swing in allocations from thematic funds to asset allocations funds like BAAF and MAF including large cap funds as a pure equity exposure.”

Jatinder Pal Singh, CEO, ITI Mutual Fund, said, "In January 2025, volatility in the Indian equity markets, combined with geopolitical uncertainties and anticipation of the Union Budget, led to a decline in equity mutual fund AUM. This resulted in a reduction of Rs. 1.1 lakh crore in the AUM of open-ended equity mutual funds but the flows were consistent with December 2024. Investors showed a preference for Large Cap and Flexi Cap funds. Additionally, investors turned to ELSS funds to take advantage of the tax-saving benefits, reflected in a ~14% rise in gross flows into these funds. Investors preferred debt and hybrid funds in Jan'25, visible by the net positive flows in these categories to the tune of 1.3 lakh crore and 0.17 lakh crore respectively."

Manish Mehta, National Head - Sales, Marketing & Digital Business, Kotak Mahindra AMC, said that January numbers came in a tad lower than December. Investor participation across various categories of schemes continue especially large cap-oriented schemes. Increasing awareness of mutual funds and it being an efficient route for long-term wealth creation is demonstrated by investor behavior who seem to be adding to investments through the SIP/STP route.

Suranjana Borthakur, Head of Distribution & Strategic Alliances, Mirae Asset Investment Managers (India), said that sectoral funds, influenced by NFO activity, should remain a small component of a diversified portfolio, with investors cautious about disproportionate allocations. Additionally, the rising inflows into gold ETFs indicate a shift toward safer assets during uncertain times. Notably, SIP inflows remain strong, exceeding ₹26,000 crore, underscoring investors’ commitment to long-term wealth creation. 

She further said, “During market corrections, SIP investors benefit by accumulating more units, reinforcing the importance of staying invested rather than pausing or stopping SIPs. For investors with a horizon beyond three to five years, mid and small-cap funds, aligned with risk appetite, should continue to be part of a well-balanced portfolio.”

Venkat Chalasani, Chief Executive, AMFI said that the reduction in the SIP accounts is due to the SEBI regulation that asks the AMCs to cancel the accounts that has been inactive for more than three months. Because of this, a total of 61.32 lakh SIP accounts were discontinued in January while 56.18 lakh new SIP accounts were added to the industry.

Viraj Gandhi, CEO at Samco Mutual Fund, said, despite the hurdles like economic growth, rising protectionist tendencies, and geopolitical uncertainties, the steadfast commitment of domestic investors through SIPs underscored a deeper confidence in the long-term potential of the Indian economy. This resilience not only cushioned the impact of external shocks but also painted a promising picture of the future, where domestic participation is seen strengthening the foundation of India’s financial markets.