Equity fund inflows ease in December, but SIP contributions rise to all-time high of Rs 31,000 crore

Equity mutual fund inflows declined by over 6 per cent to Rs 28,054 crore in December, largely due to profit booking by investors, even as Systematic Investment Plan (SIP) contributions rose to an all-time high, industry data released on Friday showed.

The moderation in equity inflows came alongside a marginal contraction in the mutual fund industry’s overall asset base. Assets Under Management (AUM) slipped to Rs 80.23 lakh crore in December from Rs 80.80 lakh crore in November, reflecting heavy withdrawals from debt schemes, according to data released by industry body Association of Mutual Funds in India (Amfi).

“The moderation in industry’s AUM was primarily driven by debt fund outflows for liquidity management and limited market-related value changes,” Venkat N Chalasani, CEO of Amfi, said.

Overall, the mutual fund industry reported net outflows of Rs 66,591 crore during the month, largely on account of steep redemptions from debt schemes, even as equity and gold funds continued to attract investor interest.

Equity inflows softened from Rs 29,911 crore in November but remained higher than Rs 24,690 crore recorded in October. Despite intermittent market volatility, flows into equity schemes remained resilient, supported by steady SIP contributions and continued confidence in India’s long-term growth outlook.

Retail participation through SIPs climbed to a record Rs 31,000 crore in December, up from Rs 29,445 crore in November, indicating a preference for disciplined and long-term wealth creation strategies.

“The data suggests that investors have consistently used market corrections as opportunities to invest more. Total SIP contributions of Rs 3.34 lakh crore in CY25 reflect long-term intent and confidence, rather than short-term speculation,” said Feroze Azeez, Joint CEO, Anand Rathi Wealth.

The moderation in equity flows was partly attributed to cooling momentum in the mid-cap and, more specifically, small-cap segments during the month, where inflows tapered following a strong run-up in valuations and periodic market corrections, said Himanshu Srivastava, Principal Research at Morningstar Investment Research India.

According to him, investors appeared to be adopting a more selective and disciplined approach in these segments, balancing return expectations with valuation comfort. Market volatility during the period also prompted investors to capitalise on profit-booking opportunities.

Most equity sub-categories recorded positive inflows in December, except dividend yield and equity-linked savings schemes (ELSS). Flexi-cap funds emerged as the top performer, attracting net inflows of Rs 10,019 crore, up from Rs 8,135 crore in November.

Mid-cap funds followed with inflows of Rs 4,176 crore, while large and mid-cap funds received Rs 4,094 crore and small-cap funds Rs 3,824 crore. Large-cap funds attracted Rs 1,567 crore during the month.

In contrast, ELSS and dividend yield funds recorded net outflows of Rs 718 crore and Rs 254 crore, respectively, pointing to profit booking and seasonal tax-related adjustments.

Investors also showed increased interest in safe-haven assets during the period. Gold exchange-traded funds (ETFs) recorded net inflows of Rs 11,647 crore in December, sharply higher than Rs 3,742 crore in November and Rs 7,743 crore in October.

“Gold ETFs recorded their highest ever inflows after gold delivered more than 70 per cent returns in CY25, pointing to some recency bias,” Azeez said.

Hybrid funds also saw net inflows of Rs 10,756 crore in December.

Meanwhile, debt mutual funds witnessed a sharp outflow of Rs 1.32 lakh crore during the month, significantly higher than the net outflow of Rs 25,693 crore recorded in November. The increase was driven by heavy redemptions from liquid, money market and ultra-short duration funds, as corporates and institutional investors withdrew surplus cash for quarter- and year-end requirements such as advance tax payments, balance-sheet adjustments and working-capital needs, Srivastava said.

He added that such seasonal outflows are typical in the December quarter and do not signal any structural weakness in demand for debt mutual funds.