The latest data released by the Association of Mutual Funds in India (AMFI) has been dismal with regard to equity mutual funds. In February, inflows into equity mutual funds fell to ₹29, 303 crore against ₹39,687 crore in the preceding month.
The systematic investment plan (SIP) inflows also dropped to ₹25,999 crore against ₹26,400 crore in January, according to the latest data.
Livemint spoke to several experts to dig deeper into the reasons for this fall. Most experts say the panic created by the market fall is to blame, and the mutual fund industry is witnessing its natural aftereffects. Financial markets around the world are facing strong headwinds. On March 10, US markets also crashed, with the S&P falling 2.7 per cent.
When investors panic
Experts believe that the decline in equity inflows has stemmed from the panic on account of market fall. The Nifty has lost as much as 16 per cent from its peak, thus pulling the mutual fund AUMs even lower.
“When investors see their portfolio bleeding, they panic and do not want to see their portfolio losing. Some investors who entered during the bull run have stopped their SIPs. However, I personally feel that this is the best time to start investing since the stocks are available at a reasonable price,” says Preeti Zende, a Sebi-registered investment advisor and founder of Apna Dhan Financial Services.
Will large caps dominate?
During volatility, it is the large cap segment which shows maximum resilience and strength.
“One can stick to the large caps by investing in Nifty50 funds, and later decide about further allocation. Meanwhile, one should refrain from investing in mid and small caps,” adds Zende.
Viraj Gandhi, CEO of SAMCO Mutual Fund, shares similar sentiments: “When times are volatile, it is the large caps that are preferred investment destinations. The market share of large-cap AUM kept falling from 17 per cent in October 2021 to 11.7 per cent in December 2024, now finally rose to 12.2 per cent in February 2025. This is led by inflows of ₹2,866 crore in the month of February 2025.”
“The mutual fund industry has shown mixed signs of caution and optimism amidst market volatility. It (26 per cent fall in equity inflow) highlights that the high-risk-taking investors are still holding in the market but choose to remain cautious,” says Ajay Garg, CEO of SMC Global Securities.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of MintGenie. We advise investors to check with certified experts before taking any investment decisions.
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