Gold, SIPs, Flexi-Caps shine, Equity MF inflows break 5-month slump in June

India’s equity mutual funds experienced a rebound in June, with net inflows climbing 24% month-on-month to ₹23,587 crore, according to data from the Association of Mutual Funds in India (AMFI). This surge reversed a prolonged five-month decline in equity inflows. 

"Equity-oriented mutual funds witnessed a notable revival in June 2025, registering net inflows of Rs 23,587 crore, up from Rs 19,013 crore in May, effectively breaking a five-month declining trend. This rebound underscores a resurgence in investor confidence, supported by a strong equity market performance across segments. Broad-based market gains, including a surge in the Nifty 50 index and even stronger rallies in the mid- and small-cap indices, helped reignite interest in equity investments," said Himanshu Srivastava – Associate Director- Manager Research, Morningstar Investment Research India.

 

 

Flows remained robust across categories, with flexi-cap, mid-cap, and small-cap funds attracting the highest investor interest. The inflows were driven by improved market sentiment, attractive valuations after recent corrections, and a portfolio reallocation toward equities amid subdued returns in other asset classes. 

 

 Key Drivers of the Revival

Flexi-cap funds led the resurgence, attracting ₹5,733 crore—up 49% from May’s ₹3,841 crore 

 

Small-cap funds saw inflows of ₹4,024 crore (+25%), while mid-cap funds drew ₹3,754 crore (+34%) 

 

Sectoral and thematic funds were the only equity category that didn't benefit, registering muted interest in June 

 

ELSS (tax-saving) funds continued to face outflows of ₹556 crore—their third straight month of investor exits, signaling reduced appetite for long-term tax savings 

 

 Market Reaction & AUM Growth

The strong inflows helped the benchmark Nifty index gain nearly 3%, reinforcing investor confidence, and pushed the mutual fund industry’s total AUM to ₹74.4 lakh crore, up from ₹72.2 lakh crore in May  

“Indian investors are becoming more mature and are allocating rationally. Allocations to flexicap and multicap funds continues. While smallcap funds are getting lower allocations due to valuation concerns. Flexicap allocation by the investors allows the fund managers to allocate across the market wherever the opportunities might lie. Sector funds are still getting positive traction but investors should be cautious while allocating being conscious of valuations in the popular sectors. The outflows from debt funds shows that investors are clear that there is better upside in equities than debt from a interest cutting cycle," said Dr. Vikas Gupta, CEO & Chief Investment Strategist at OmniScience Capital 

   

 Shift Toward Safe-Haven Assets

Notably, Gold ETF inflows surged nearly tenfold to ₹2,081 crore, their highest in five months, reflecting a growing preference for gold amid global trade uncertainties 

 

Sector-Wise Inflows Across Funds

Hybrid funds attracted ₹23,222 crore (+12%), led by  inflows into arbitrage schemes (₹15,584 crore) 

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Passive funds—including index ETFs—registered moderate inflows (~₹4,000 crore), down 28% compared to May 

 

Debt funds saw net outflows of ₹1,711 crore, an improvement from the ₹15,908 crore outflow in May  

Short Duration Funds, saw renewed interest, reporting Rs 10,276 crore in June, making it the highest monthly inflow within fixed income space, indicating growing investor comfort with short term duration bets. Money Market Funds too posted healthy inflows of INR 9,484 crore, continuing the strong traction seen over the last few months. The category attracted over Rs 52,000 crore in the last quarter alone, making it the top contributor in the fixed income space for the period. Similarly, Corporate Bond Funds remained in favour with inflows of Rs 7,124 crore, as investors were likely drawn to attractive yields and improving credit sentiment.

 

Meanwhile, Gilt and Long Duration Funds witnessed outflows. The Gilt category saw mild outflows of INR 957 crore, while Long Duration Funds reported net outflows of Rs 445 crore in June, reversing the modest gains seen in the prior month. 

 

"These outflows came despite the broader anticipation of a policy easing cycle, reflecting investor caution amid ongoing market volatility and growing expectations that the scope for further rate cuts may be limited. With much of the rate-cut expectations already priced in and the timing and pace of monetary easing still uncertain, investors appear to be cautious while investing in duration-heavy strategies. That said, over the past six months, Long Duration Funds have still managed to attract INR 5,928 crore, indicating selective allocation interest from duration-seeking investors. Should rate cut expectations become more pronounced, these segments may see renewed inflows in the coming months.

 

Overall, while headline flows in June remained in negative territory, the underlying breadth of inflows across money market, corporate bond, and low-duration categories suggests growing investor appetite for yield opportunities. The fixed income category, after a difficult FY2024, has already garnered net inflows of INR 1.21 lakh crore in the first half of FY 2025, signaling a potential structural turnaround," said Nehal Meshram, Senior Analyst – Manager Research, Morningstar Investment Research India

 

Meanwhile, SIP flows rose to ₹27,269 crore, up from ₹26,688 crore in May, indicating sustained long-term investment discipline .   

"A very healthy growth witnessed in net equity flows MoM by approx. 5k cr. SIP registrations in count as well as flow has touched all time high of 27.3k cr which is up by almost 600 cr. There is confidence amongst retail investors which is reflecting through the incremental flows, this is very healthy and positive for the industry and Indian markets”, said Akhil Chaturvedi, Executive Director & Chief Business Officer, Motilal Oswal AMC.

 

 What’s Driving Investor Behaviour?

Market optimism following inventories and corporate earnings, reflected in recent equity gains.

 

Higher-risk appetite, especially in flexi-cap and mid/small-cap funds.

 

Gold's safe-haven appeal amid global headlines over trade tensions and geopolitical instability. 

Gold ETFs witnessed a sharp uptick in investor interest in June 2025, recording net inflows of Rs 2,080.85 crore, the highest monthly inflow since January. This builds on the modest recovery in May (INR 291.91 crore), following muted activity and marginal outflows in March and April. The robust inflows in June indicate a decisive shift in sentiment, likely supported by resilient gold prices, geopolitical uncertainties, and volatility in equity and fixed income markets, which have revived gold’s appeal as a safe-haven asset.

 

"In June, two new Gold ETFs were launched, collectively mobilizing INR 41 crore. While the fund mobilisation through new launches remained modest, it adds to the broader recovery in flows and reflects steady investor interest in the asset class.

 

With net inflows crossing Rs 8,000 crore in the first half of 2025, Gold ETFs are increasingly being used as part of long-term asset allocation strategies. The trend highlights gold’s continued relevance in diversified portfolios, particularly amid uncertain economic and policy backdrops," said  Nehal Meshram, Senior Analyst – Manager Research, Morningstar Investment Research India

   

Investor Takeaways

1. Opportunity vs. Stability:

With equity inflows rebounding, now might be an opportune time to consider flexi, mid, or small-cap funds. Simultaneously, rising gold inflows suggest balancing portfolios with a safe-haven asset.

 

2. Review Tax-Saver Strategies:

With continued withdrawals from ELSS schemes, investors should re-evaluate if their tax-saving choices are delivering adequate returns.

 

3. Stick with SIPs:

SIP contributions remain strong, supporting rupee-cost averaging even amid market volatility.

 

 What to watch next

Sustained equity momentum: Will flows continue to rise alongside benchmarks?

 

Geopolitical developments: As uncertainties ease, will gold ETF demand taper?

 

Debt-fund dynamics: Flows are improving—watch for rate and liquidity impacts.

 

 June’s revival in equity mutual fund inflows signals renewed investor confidence, while gold’s resurgence underscores lingering caution. A diversified strategy—combining equity upside, SIP discipline, and safe-haven assets—could serve well as markets navigate global headwinds. 

"The consistent rise in equity inflows, especially in mid and small-cap segments, reflects growing investor confidence in India’s long-term growth narrative despite global uncertainties. The uptick in hybrid strategies also suggests that investors are increasingly seeking a balance between growth and risk mitigation—a healthy sign of evolving market maturity. With global rate cycles stabilising and India’s earnings season underway, we expect investor focus to remain strong on thematic and multi-asset categories heading into Q2 FY26.

 

Equity mutual fund net inflows rose 24% month-on-month to ₹23,587 crore from ₹19,013 crore in May, led by strong demand in Flexi Cap, Small Cap, and Mid Cap categories. Hybrid funds sustained momentum with ₹23,223 crore in net inflows vs ₹20,765 crore in May, driven by arbitrage and multi-asset allocation strategies. This reflects rising preference for products balancing return potential with volatility protection," said Ankur Punj MD and National Head Equirus Wealth.

 

Debt-oriented funds saw moderated outflows of ₹1,711 crore, compared to a sharper ₹15,908 crore in May. 

 

"While Liquid and Overnight Funds witnessed quarter-end redemptions, steady inflows into Corporate Bond and Short Duration Funds signal selective optimism in fixed income. ETF flows totaled ₹3,997 crore, down from May’s ₹5,526 crore, with Gold ETFs dominating, as investors moved towards safe-haven assets amidst global macro uncertainty," added Punj.