Passive equity flows hit record on dip buying, year-end allocations

Equity ETFs and index funds attract record Rs 30,235 crore inflows in March, driven by dip buying and year-end institutional allocations amid market volatility

The sharp pickup in equity mutual fund (MFs) investments in March extended to the passive side as well, with combined inflows into equity exchange-traded funds (ETFs) and index funds hitting a record high last month.

 

Equity passive funds attracted net inflows of ₹30,235 crore in March — the highest since the Association of Mutual Funds in India began releasing such data in April 2023. 

 

Of this, domestic equity ETFs alone accounted for ₹23,820 crore, nearly six times February’s ₹4,141 crore and well above the previous peak of ₹13,803 crore recorded in October 2024. Inflows into index funds also doubled month-on-month to ₹6,415 crore.

 

The surge in inflows into equity passive offerings, according to experts, reflects increased deployment by investors during last month’s market correction.

 

"March witnessed heightened investor participation in domestic equity ETFs, driven by increased market volatility, which provided investors with attractive buying opportunities," said Hemen Bhatia, ED & CEO, Angel One AMC.

 

Nikunj Saraf, CEO of Choice Wealth, also attributed the rise in flows to investors buying on dips.

 

“The surge in equity ETF inflows to nearly ₹24,000 crore in March truly underscores a maturing investor mindset, with many seizing market dips triggered by West Asia tensions as prime buying opportunities for the long haul," he said.

 

The domestic equity market witnessed a sharp decline in March, weighed down by the US-Iran conflict, with the benchmark Nifty 50 index ending the month down over 11 per cent. The pickup in equity mutual fund investments was also visible on the active side, with net inflows into active equity schemes rising to an eight-month high of ₹40,450 crore. Gross inflows surged to a record of nearly ₹84,000 crore.

 

However, the spike in passive fund inflows may also reflect institutional allocations, as ETF flows are typically dominated by institutional investors, unlike active funds which see higher retail participation. 

 

ETF inflows also tend to rise in March, likely due to year-end allocations by institutions. In March 2024 and March 2025, equity ETF inflows stood at ₹10,314 crore and ₹11,808 crore, respectively — the highest in those years.

 

Folio data, however, points to a pickup in individual investor participation as well. Domestic equity ETFs added around 600,000 folios in March 2026 — the highest monthly addition in FY26 and a sharp increase from about 400,000 in February. Equity index funds saw a net addition of around 242,000 folios during the month, also improving sequentially. That said, folio additions remain below the peaks recorded in FY25.