Equity mutual fund flows fall to a 11-month low in March

Retail buying into equity mutual funds hit an 11-month low in March, as investors slowed down on their purchases amid uncertainty on global tariffs and expectations of slow earnings growth in the fourth quarter of 2024-25. Investors allocated ₹25,802 crore to equity mutual funds in March, 14% lower than ₹29,303 crore in the previous month.

Investments through monthly systematic investment plans fell marginally to ₹25,926 crore from ₹25,999 crore in February.

Debt funds saw outflows of ₹2.03 lakh crore, largely on account of corporate investors withdrawing in March from overnight, liquid and ultra-short-term funds to manage liquidity and pay tax.


As per data from the Association of Mutual Funds in India (Amfi), average assets under management increased marginally to ₹66.70 lakh crore in March from ₹66.43 lakh crore in the previous month.

"Redemptions were 25% higher in equity mutual funds during the month, with profit booking being a major contributor," said Akhil Chaturvedi, chief business officer at Motilal Oswal AMC.

Sectoral and thematic funds saw sharp dips in flows in March as investors stayed away from narrow themes and stuck to diversified equity mutual funds. Sector and thematic funds garnered ₹170 crore against ₹5,711 crore in February and ₹9,017 crore in January.

Inflows into small-cap and mid-cap funds increased, with midcaps adding ₹3,439 crore against ₹3,409 crore in February, while in the case of small caps, they added ₹4,092 crore against ₹3,722 during the period.

Flexicap funds attracted ₹5,615 crore against ₹5,104 crore while multi-cap funds garnered ₹2,753 crore against ₹2,518 crore. Large-caps garnered ₹2,479 crore compared to ₹2,866 crore in the previous month.

After ten consecutive months of net inflows, gold exchange-traded funds witnessed a sharp reversal in March, recording net outflows of ₹77 crore compared to robust inflows of ₹1,979 crore in February.

"The dip can be attributed to profit-booking by investors following a sustained rally in gold prices. Some investors opted to rebalance their portfolios by reducing exposure to gold, leading to temporary outflows from the category," said Nehal Meshram, senior analyst-manager research at Morningstar Investment Research India.

Among hybrid funds, multi-asset allocation funds that invest in a mix of equity debt and gold received inflows of ₹1,670 crore in March, lower than ₹2,228 crore in the previous month. Arbitrage funds saw outflows of ₹2,855 crore as corporate investors removed some money to meet year-end needs.

Liquid funds saw withdrawals of ₹1.33 lakh crore, overnight funds saw net outflows of ₹30,015 crore, while ultra short-term funds saw withdrawals worth ₹9,647 crore.

"These are typical quarterly redemption patterns driven by prevailing global liquidity scenario and various year-end corporate requirements," said Sanjay Agarwal, senior director at CareEdge Ratings.