Sectoral categories have seen slower flows which is a good thing considering there was disproportionate flows into the category in previous months; Continued Inflow Into Small-Cap Funds Is Encouraging
FinTech BizNews Service
Mumbai, April 12, 2025: Association of Mutual Funds in India (AMFI) has released MF industry’s Monthly Data for March 2025. Here are views Of Experts On March'25 AMFI Data:
Akhil Chaturvedi, Executive Director & Chief Business Officer, Motilal Oswal AMC
Subscriptions into equity infact went up by 4% from last month. However, investors redeemed higher amount this month, redemptions went up by 25% compared to previous month. What would take most market participants by surprise is that the redemptions went up most in Large Caps (54% higher than last month) besides sectoral and thematic (55% higher than last month). Small Caps saw a dip in redemptions (15% less than last month). Volatility could also not save Balanced Advantage funds which also saw 30% increase in redemptions compared to last month despite the positioning of BAF funds as best during volatility. Yet, redemptions were less compared to all 7 months between Apr 2024 to Oct 2024.
We believe, profit booking was a major contributor. April outflows would be a better a better indicator to watch for gauging investor sentiment. We believe April is an opportunity for investors to increase their equity allocations and also expect redemptions to come down in April. Selling in debt at shorter end is mostly on account of advance tax and year end considerations. At long end, investors seem to have booked profits after recent rally in long dated bonds.
Suranjana Borthakhur, Head of Distribution & Strategic Alliances, Mirae Asset Investment Managers (India):
"Despite the market volatility, the overall flows into equity funds remain relatively resilient, indicating that investors are not making panic-driven decisions. The overall flows are impacted because of large outflows of debt which is traditionally seen in year-end cycles.
What’s encouraging is the continued inflow into small-cap funds assuming investors are keeping a long-term time horizon in mind and not getting swayed away by recent experience only. Sectoral categories have seen slower flows which is a good thing considering there was disproportionate flows into the category in previous months.
Also, sustained SIP contributions above ₹25,000 crore, which reflects a maturing investor mindset focused on long-term goals. However, the sharp drop in hybrid fund flows is concerning—especially since hybrid products are well-suited to help investors navigate market fluctuations with a balanced risk approach. In times like these, maintaining discipline, staying invested, and relying on diversified solutions like hybrid products can truly help investors ride through volatility while staying aligned with their financial objectives."
Juzer Gabajiwala, Director, Ventura
“Debt funds have seen a huge drop in the net inflows. In debt funds mainly due to year end effect we have seen a huge withdrawal in liquid; overnight funds. Arbitrage funds also seem to have seen a dip due to that factor. Equity markets has overall seen a drop but that has been mainly due to drop in thematic. Investors looking at the market sentiment are avoiding that theme. In fact, small cap has seen an increased allocation. There is an increase in redemption. In fact there is also around 5% increase in gross equity collection. Gold has also surprisingly seen a net redemption. SIP collections have also seen a slight dip in collections.”
Sanjay Agarwal, Senior Director, CareEdge Ratings:
‘‘The mutual fund industry’s assets under management increased by 2% m-o-m to Rs.65.74 lakh crore primarily due to MTM gains in the equity space during March 2025. However, the industry faced net outflows of Rs.1.64 lakh crore primarily in debt mutual funds amounting to Rs. 2.03 lakh crore, with liquid funds and money market funds together facing 76% of the debt outflows. While these outflows are higher than the quarterly levels of the whole year of FY25, they are typical quarterly redemption patterns driven by prevailing global liquidity scenario and various year end corporate requirements.
Meanwhile net equity inflows have remained positive for the last 49 months, witnessing Rs 0.25 lakh crore net inflows in March 2025 with all equity categories registering net inflows for the month. However, net inflows declined by 14% as compared to February 2025 (February 2024: decline by 7%). Additionally, during March 2025, 30 open-ended NFOs were floated which collectively mobilised Rs.0.04 lakh crore with index funds accounting for 50% share.
Given the ongoing international trade tariffs tensions, the interest rate scenario, and concerns about the outlook for global economic growth, investors' willingness to invest in such conditions will be a key monitorable for the next two to three months.’’
