Equity MF inflows hit 12-month low in April 2025, no major NFOs either

ril marked the fourth consecutive month of declining net equity inflows, bringing them to their lowest level in the past 12 months.

Equity mutual fund inflows in India fell to a 12-month low of Rs 24,269 crore in April 2025, marking the fourth consecutive month of decline, according to data released by the Association of Mutual Funds in India (AMFI). The dip of 3.24% from Rs 25,082 crore in March reflects increasing investor caution amid mounting global uncertainties, including potential U.S. tariff escalations and rising geopolitical tensions between India and Pakistan.

 

Net inflow of the mutual fund industry was at Rs 2.76 lakh crore, against an outflow of Rs 1.64 lakh crore the previous month.

 

Despite the slowdown, the overall trend remains positive—April marked the 50th consecutive month of net equity inflows.

 

 

"The sustained inflows underscore improving investor sentiment, supported by strong corporate earnings, resilient macroeconomic fundamentals, and a continued tilt towards equities as the preferred asset class. Notably, the absence of any major new fund launches during the month indicates that investors largely allocated capital to existing schemes—a testament to their confidence in the long-term growth prospects of Indian equity markets," said Himanshu Srivastava – Associate Director- Manager Research, Morningstar Investment Research India.

 

Total assets under management (AUM) for equity-oriented schemes rose from Rs 29.45 lakh crore in March to Rs 30.57 lakh crore in April, reflecting capital appreciation and consistent inflows.

 

Flexi-Cap Funds Lead, ELSS Sees Seasonal Outflows

All equity fund categories, except the Equity Linked Savings Scheme (ELSS), recorded net inflows. ELSS saw seasonal outflows post the tax-planning period ending March. Among the top gainers, Flexi-cap funds emerged as the most favored category, indicating investors’ preference for diversified exposure across large-, mid-, and small-cap stocks.

 

ETFs Gain Momentum Amid Cost-Conscious Investing

On the passive investing front, Exchange Traded Funds (ETFs) continued to gain popularity. The ‘Other ETFs’ category recorded net inflows of Rs 19,056 crore in April, up sharply from Rs 10,961 crore in March—highlighting investor interest in cost-efficient, index-linked investment options amid market uncertainty.

 

Top 5 Fund Houses Drive Majority of New Investors

The financial year 2025 also witnessed massive growth in retail participation, with five mutual fund houses contributing 58% of all new investor accounts (folios) added during the year.

 

According to AMFI, Nippon India, HDFC, Motilal Oswal, ICICI Prudential, and SBI Mutual Fund collectively added 31.6 million folios out of 54.9 million in FY25.

 

Among them, Motilal Oswal Mutual Fund stood out for tripling its folio base to 9.4 million, the fastest growth among the top 20 fund houses—thanks to strong scheme performance and multiple fund launches.

 

At the end of March 2025:

• Nippon India MF led with 32.5 million folios
• ICICI Prudential had 25.8 million
• HDFC MF stood at 23.3 million
• SBI MF held 19.1 million

 

Fixed income funds: 

After ending the previous two months on a weak note with significant net outflows, debt-oriented open-ended mutual funds witnessed a sharp recovery in April 2025, posting substantial net inflows of Rs 2,19,136 crore. This rebound follows the March 2025 outflows of Rs 2,02,663 crores, which were primarily driven by typical fiscal year-end redemptions, especially by institutional investors seeking liquidity for advance tax payments and balance sheet adjustments.

 

The April rebound was broad-based, with 12 out of 16 debt mutual fund categories reporting net inflows. The surge in April inflows also reflects a return to normalcy and reaffirmed confidence in fixed income instruments, particularly among corporates redeploying idle cash following year-end disbursements.

 

 Liquid funds witnessed highest net inflows of Rs 1,18,656 crore, reversing more than 89% of their March outflows. Similarly, overnight funds and money market funds attracted Rs 23,899.98 crore and Rs 31,507.04 crore respectively, as short-term instruments regained favor amid stable monetary conditions and strong liquidity.

 

The significant inflows also extended to ultra short and low duration funds, which garnered Rs 26,733.81 crore and Rs 9,370.62 crore respectively, signaling renewed interest in slightly longer short-term strategies offering better risk-adjusted returns.

 

"Interestingly, duration-oriented funds also showed signs of stabilization. Medium and medium-to-long duration funds turned positive in April after outflows in previous months, supported by investor optimism about potential rate cuts. While the typically volatile credit risk and gilt fund categories saw relatively muted movements.

 

Although gilt funds continued to witness marginal outflows, the moderation in redemptions relative to March levels points to stabilizing sentiment in rate-sensitive segments. Banking & PSU funds also saw a return to positive flows, further underscoring the cautious but improving sentiment in the debt fund space," said  Nehal Meshram, Senior Analyst – Manager Research, Morningstar Investment Research India.