Equity Inflows Dip in March 2025; Sectoral and Thematic Inflows Plunge by 97%, SIPs Inflows Decline

Equity mutual fund inflows registered a sharp decline in March 2025, falling to ₹25,082 crore from ₹29,303 crore in February – a drop of 14.4%, according to the latest AMFI data. The fall suggests investor hesitation amidst market uncertainty, fueled by global macroeconomic concerns and domestic headwinds.

Sectoral and Thematic Funds Witness 97% Drop in Inflows

The most dramatic shift was observed in Sectoral and Thematic Funds, where net inflows plunged 97%. These funds, which had attracted ₹5,712 crore in February, barely garnered ₹170 crore in March. This steep drop indicates a significant retreat by investors from theme-based or niche sector strategies during turbulent times.

SIP Inflows Record 4th Straight Monthly Decline

Systematic Investment Plan (SIP) inflows also continued their downward trend for the 4th consecutive month. In March 2025, SIP collections stood at ₹25,926 crore, slightly lower than ₹25,999 crore in February. While the dip may appear marginal, the consistent decline over several months reflects cautious behaviour by retail investors in response to volatile market conditions, US tariff concerns, inflationary pressures, and geopolitical developments.

Equity AUM Rises Despite Drop in Fresh Inflows

Interestingly, despite the decline in monthly inflows, the total equity assets under management (AUM) saw a notable increase. As per AMFI, equity AUM rose by 7.6%, from ₹27.4 lakh crore in February to ₹29.5 lakh crore in March 2025. This growth was likely driven by market appreciation and sustained long-term investments.

Mixed Performance Across Market Cap Categories

The equity mutual fund segment showed varied trends across market capitalisation categories:

• Largecap Funds saw inflows decline by 13.5%, down from ₹2,866 crore in February to ₹2,479 crore in March. 
• Midcap Funds posted a slight increase in net inflows, rising to ₹3,439 crore from ₹3,406 crore. 
• Smallcap Funds recorded a healthy 10% month-on-month growth in inflows, climbing from ₹3,722 crore in February to ₹4,092 crore in March.

Liquid Funds See Steep Outflows

Liquid funds, which typically attract short-term capital due to their low-risk nature, witnessed a significant outflow of ₹1.33 lakh crore in March. This marks a stark contrast to February, when the category saw inflows of ₹4,977 crore. These funds invest in short-term debt instruments with maturities of up to 91 days and are often used by corporates to manage surplus liquidity.

Debt Fund Outflows Surge on Liquid Fund Redemptions

As a result of the heavy redemptions in liquid funds, the overall debt mutual fund category saw net outflows of ₹2.02 lakh crore in March. This is a significant reversal from February’s inflows of ₹6,525 crore. Such movements are often linked to institutional repositioning, fiscal year-end cash requirements, or shifts in interest rate expectations.

Overall Mutual Fund AUM Continues to Grow

Despite the challenges, the mutual fund industry’s total AUM continued to grow, reaching ₹65.74 lakh crore in March 2025 from ₹64.53 lakh crore in February. This rise highlights the resilience of the broader investor base and the impact of rising asset prices across segments.

Conclusion

March 2025 brought a combination of caution and continuity for the Indian mutual fund industry. While inflows into equity mutual funds, especially sectoral and thematic schemes, fell sharply, and SIPs continued to decline, overall AUM rose steadily. The data points to a discerning investor class, adjusting allocations in light of ongoing global and domestic challenges.

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