Equity MF inflows ease 9% in Sept; gold, silver ETFs draw record sums

Equity fund flows moderate amid higher redemptions, while SIPs hit record highs and flexicap funds continue to see strong investor interest

Net inflows into equity mutual funds (MFs) moderated for the second straight month in September, declining 9 per cent during the month to ₹30,422 crore.

 

The slowdown came as redemptions from active equity schemes rose 30 per cent month-on-month (M-o-M) to a one-year high of around ₹36,000 crore. 

 

The impact of the sharp rise in outflows was partially offset by sustained inflows through systematic investment plan (SIP) and lump sum routes. SIP contributions climbed 4 per cent M-o-M to a fresh all-time high of ₹29,361 crore.  

 

“SIPs reached a new milestone with a record monthly contribution of ₹29,361 crore and 92.5 million active accounts. This reaffirmed retail investors’ growing preference for disciplined and systematic investing,” said Venkat N Chalasani, chief executive, Association of Mutual Funds in India (Amfi).  

 

While equity inflows moderated, commodity exchange-traded funds (ETFs) witnessed a surge amid a rally in gold and silver prices.

 

Gold ETFs attracted ₹8,151 crore in September, a sharp jump from ₹2,190 crore in August, while inflows into silver ETFs tripled M-o-M to ₹5,342 crore. The combined net inflows into gold and silver ETFs were at record highs last month.  

 

“Gold ETFs witnessed resurgence in safe-haven demand in September, reflecting a combination of global risk aversion and tactical positioning ahead of major central bank policy reviews. Investors turned to gold as a reliable store of value amid heightened geopolitical tensions, volatile markets, and a stronger dollar,” said Nehal Meshram, senior analyst – manager research, Morningstar Investment Research India.  

 

Analysts attribute the rise in commodity ETF investments and higher equity fund redemptions to shifts in investor portfolios.

 

They also point to changing preferences across equity categories.  

 

“While overall inflows softened, the trend reflects portfolio rotation rather than investor retreat. Select categories such as value/contra funds (up 85 per cent), focused funds (up 22 per cent), multicap funds (up 11 per cent), and large & midcap funds (up 14 per cent) continued to attract strong interest. This signals that investors remain engaged but are becoming more selective amid market consolidation,” said Jatinder Pal Singh, chief executive officer (CEO), ITI MF.  

 

Flows into popular smallcap and midcap schemes moderated during the month but remained among the leading contributors to overall equity inflows.

 

Flexicap funds continued to see robust demand, garnering over ₹7,000 crore for the third consecutive month.  

 

“Flexicap continues to see strong inflows, while largecaps remain consistent at around ₹2,300 crore.

 

Mid and smallcap segments have seen minimal changes, with midcaps at about ₹5,000 crore and smallcaps around ₹4,300 crore. One area showing upside is the value-contra segment, rising from an average of ₹1,000 crore in recent months to about ₹2,100 crore. Overall, there is no reason for concern,” said Suranjana Borthakur, head of distribution & strategic alliances, Mirae Asset Investment Managers (India).

 

Debt-oriented schemes saw a sharp reversal in September, with net outflows exceeding ₹1 trillion. The decline was in line with expectations, as large institutions typically redeem from liquid and money market funds at the end of each quarter for liquidity management and advance tax payments.  

 

The mutual fund industry’s total assets under management (AUM) rose marginally to ₹75.6 trillion in September from ₹75.2 trillion in August.