Equity Inflows Drop 26% in February 2025 as Market Correction Continues: AMFI

Equity Inflows Decline Amid Market Selloff

Net equity inflows into mutual funds dropped sharply in February as the market continued its decline, having lost 18% since its September peak. The inflows fell to ₹29,303.34 crore, marking a 26% decline from January.

The overall assets under management (AUM) of the mutual fund industry also declined by 4.04%, dropping from ₹67.25 trillion in January to ₹64.53 trillion in February, driven by heavy mark-to-market losses in the equity segment.

Impact of Market Correction on Equity Funds

The dip in inflows coincided with a steep fall in key indices—Sensex declined 5.55%, while Nifty fell 5.89% in February. The downturn was attributed to global uncertainties, weak earnings, and concerns over economic growth.

Among equity fund categories, inflows into large-cap funds fell 6.4% to ₹2,866 crore, while midcap and smallcap funds saw the sharpest declines:

• Smallcap fund inflows plunged 35% to ₹3,722.46 crore
• Midcap fund inflows fell 33.8% to ₹3,406.95 crore

However, focused funds were an exception, recording a 64.4% rise in inflows to ₹1,287.72 crore, as investors looked for selective opportunities amid the market downturn.

Debt Funds Witness Net Outflows

Debt-oriented funds recorded significant outflows, with net redemptions of ₹6,525.56 crore in February, a sharp reversal from ₹1.28 trillion in net inflows in January.

Key trends in debt fund flows:

• Ultra-short duration funds saw outflows of ₹4,281.02 crore
• Money market funds witnessed net selling of ₹3,275.97 crore
• Liquid funds attracted net inflows of ₹4,976.97 crore
• Corporate bond funds recorded a net buying of ₹1,064.84 crore

Investor Sentiment

Despite the decline in inflows, February marked the 48th consecutive month of positive net inflows into equity mutual funds, indicating continued investor participation. While short-term uncertainties have moderated investment flows, domestic investor confidence remains steady.

Conclusion

Equity mutual fund inflows declined sharply in February amid a broader market correction, leading to a drop in the industry’s AUM. While smallcap and midcap funds saw the biggest pullback, focused funds gained traction. On the debt side, outflows dominated, reflecting investor repositioning amid expectations of interest rate movements. Despite near-term volatility, long-term investor participation in mutual funds remains strong.

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