NFO slump sends equity flows down 22% in Aug, SIP accounts shrink

SIP inflows fall for first time in four months as accounts dip

Net inflows into equity mutual fund (MF) schemes moderated to ₹33,430 crore in August, a 22 per cent drop from the record ₹42,702 crore in July, primarily due to lower collections from new fund offerings (NFOs).

 

Active equity NFOs brought in ₹2,056 crore in August, compared with nearly ₹9,000 crore in July.

 

“The decline in flows compared to the previous month — roughly ₹9,000 crore — is largely due to the drop in NFO collections. For the rest, the flow momentum is steady and healthy,” said Akhil Chaturvedi, executive director and chief business officer, Motilal Oswal Asset Management Company.

 

Inflows were also impacted by a decline in systematic investment plan (SIP) investments. Gross SIP inflows at ₹28,265 crore were down 0.7 per cent month-on-month (M-o-M), after a record ₹28,464 crore in July.

 

The drop in SIP inflows — the first in four months — coincided with a fall in contributing SIP accounts. In August, 89.9 million accounts contributed to SIP flows, down from 91.1 million in July. The last time contributing SIP accounts shrank was in February and March 2025.

 

Despite the sharp M-o-M decline, equity MF inflows in August were higher than the average inflows in the first seven months of 2025. 

 

“The resilience in August flows can largely be credited to sustained momentum through SIPs, which continued to see strong monthly contributions. Retail investors, in particular, remained consistent in their allocations, undeterred by global volatility,” said Himanshu Srivastava, associate director–manager research, Morningstar Investment Research India.

 

Even as overall inflows dipped, there was sustained momentum in three of the most popular equity fund categories: flexicap, midcap, and smallcap. Flexicap funds garnered over ₹7,000 crore in inflows for the second consecutive month. Investments in midcap funds rose from ₹5,182 crore in July to ₹5,331 crore in August, while smallcap funds, despite a M-o-M decline, also collected close to ₹5,000 crore.

 

“Equity funds recorded net inflows of ₹33,430 crore, marking the 54th consecutive month of positive flows. Categories such as flexicap, midcap, and smallcap funds continued to see strong participation, with midcap funds registering their highest-ever monthly inflows,” said Venkat N Chalasani, chief executive, Association of Mutual Funds in India.

 

Inflows weakened in the debt and hybrid scheme segments as well. Debt schemes saw a net outflow of nearly ₹8,000 crore in August, compared with ₹1.07 trillion in July. Hybrid fund inflows declined from ₹20,900 crore to ₹15,300 crore.

 

Lower inflows, coupled with mark-to-market losses in equity and some debt and hybrid schemes, resulted in a 0.2 per cent decline in the assets under management (AUM) of the industry. The AUM stood at ₹75.2 trillion at the end of August.