India’s mutual fund industry recorded a net outflow of Rs 43,146 crore in September, marking the first negative monthly flow in FY26 and reversing the robust Rs 52,443 crore inflow seen in August, according to data from the Association of Mutual Funds in India (AMFI). The decline represents a sharp 182 per cent month-on-month fall, largely driven by heavy redemptions in debt-oriented schemes.
Despite the overall outflow, equity mutual funds continued to attract steady inflows of Rs 30,422 crore, down 9 per cent from August’s Rs 33,430 crore. The consistent inflow trend highlights investors’ sustained confidence in equities, supported by strong retail participation and record Systematic Investment Plan (SIP) contributions. Over the past six months, equity inflows have remained above Rs 19,000 crore, reflecting optimism toward long-term wealth creation.
The total Assets Under Management (AUM) of the mutual fund industry rose marginally by 0.53 per cent to Rs 75.61 lakh crore in September from Rs 75.2 lakh crore in August. Equity AUM climbed to Rs 33.7 lakh crore, up 1.81 per cent month-on-month, underscoring resilience in retail participation despite market volatility.
Debt Funds Witness Heavy Outflows
Debt-oriented schemes bore the brunt of redemptions, witnessing massive withdrawals of Rs 1.02 lakh crore, the highest since April 2024 amid quarter-end redemptions and institutional liquidity adjustments. In contrast, August had seen outflows of just Rs 7,979 crore.
Liquid funds recorded the steepest withdrawal at Rs 66,042 crore, followed by money market funds at Rs 17,900 crore. Ultra-short-duration and short-duration funds faced outflows of Rs 13,606 crore and Rs 2,173 crore, respectively. Corporate bond and low-duration funds also saw withdrawals of Rs 1,444 crore and Rs 1,253 crore.
Longer-term debt categories showed marginal inflows, long-duration funds added Rs 61 crore, medium-to-long-duration funds Rs 103 crore, and dynamic bond funds Rs 519 crore — suggesting investor caution amid evolving rate expectations.
Equity Inflows Stay Resilient
Flexi-cap funds led the equity inflow chart with Rs 7,029 crore, followed by mid-cap funds at Rs 5,085 crore and small-cap funds at Rs 4,363 crore, showing sustained investor appetite for growth-oriented schemes. Large- and mid-cap funds attracted Rs 3,805 crore, while multi-cap funds garnered Rs 3,560 crore.
Large-cap funds saw inflows of Rs 2,319 crore which is down by 18 per cent despite volatile markets, while value and contra funds nearly doubled to Rs 2,108 crore, highlighting selective investor rotation. However, sectoral and thematic funds cooled, recording Rs 1,221 crore in inflows compared to Rs 3,893 crore in August.
According to Suranjana Borthakur, Head of Distribution & Strategic Alliances, Mirae Asset Investment Managers (India), equity inflows remain robust despite a slight dip. “Flexi-cap continues to see strong inflows of about Rs 7,000 crore, while large caps remain consistent. Value and contra segments have seen upside, rising from an average Rs 1,000 crore to about Rs 2,100 crore. Hybrid inflows have been impacted slightly due to arbitrage outflows, but gold and silver ETFs continue to attract investor interest,” she said.
Passive And Hybrid Segments Maintain Momentum
Hybrid schemes extended their positive streak for the sixth consecutive month with inflows of Rs 9,397 crore, albeit lower than August’s Rs 15,293 crore. The “Others” category which includes ETFs and index funds are continued to draw strong interest with inflows of Rs 19,057 crore, underlining the rising preference for passive investment products.
“While overall inflows softened, the trend reflects portfolio rotation rather than investor retreat,” said Jatinder Pal Singh, CEO, ITI Mutual Fund. “Select categories such as value/contra, focused, multicap, and large-and-midcap funds continued to attract strong interest, signalling that investors remain engaged but more selective amid market consolidation.”
Adding perspective, Nikunj Saraf, CEO, Choice Wealth, noted that September’s mutual fund trends reflect a maturing investor mindset. “After months of euphoric flows, investors now seem to be booking partial profits and adopting a more measured approach. Yet, retail conviction remains unshaken — SIP contributions surged to an all-time high of Rs 29,361 crore, reaffirming the culture of disciplined investing,” he said.
Saraf added that gold ETFs saw their biggest-ever monthly inflow of nearly USD 900 million, pushing total AUM beyond USD 10 billion reflecting investor caution amid global uncertainty.
Despite the overall net outflow, the data underscores a maturing investment ecosystem where equity and passive funds remain key pillars of confidence, while debt categories continue to face cyclical liquidity pressures. |
