Inflows into equity mutual fund (MF) schemes declined for the third month in a row in March even though the equity market recovered sharply.
Equity MF schemes raked in a net Rs 25,082 crore in March, down 14 per cent from February.
Inflows were supported by systematic investment plan (SIP) inflows, which are resilient despite the number of accounts shrinking.
SIP inflows stood at Rs 25,926 crore last month compared to Rs 25,999 crore in February.
"Equity inflows hit a 11-month low but remained robust in March at around Rs 25,000 crore.
"The drop is largely due to thematic funds.
"SIP contributions stayed strong, crossing Rs 25,000 crore for yet another month.
"This resilience highlights the commitment of Indian investors to systematic, long-term investing," said Gaurav Goyal, national head (sales & marketing), Canara Robeco AMC.
Active SIP accounts shrunk for the third month as well, largely due to the ongoing reconciliation exercise, according to the Association of Mutual Funds in India (Amfi).
There were 100.5 million active SIP accounts at the end of March while the number was 101.7 million in February.
The number of contributing accounts declined from 82.6 million to 81.1 million.
Flexicap schemes led the inflows chart, accumulating over Rs 5,000 crore for the third month in a row.
Smallcap and midcap schemes remained popular, together collecting more than Rs 7,500 crore.
Sectoral and thematic schemes witnessed the biggest decline as inflows plummeted to Rs 170 crore from Rs 5,700 crore in February.
A decline in equity new fund offers (NFOs) in recent months has also weighed on the inflows.
While the net inflows into equity schemes have declined in the past few months, the downturn in March happened despite a market recovery.
Benchmark indices Sensex and Nifty 50 gained nearly 6 per cent in March after logging losses for three months.
According to MF experts, while the market recovered, global trade uncertainty ahead of US President Donald Trump’s tariff announcements may have forced investors to wait on the sidelines.
"Market volatility spurred by tariff concerns led to increased investor caution, particularly after recent signals from the US, indicating a potential reimposition or escalation of trade tariffs on key sectors such as technology and manufacturing.
"Such measures have raised fears of a renewed global trade conflict, which could disrupt supply chains, impact export-driven industries, and lead to inflationary pressures," said Nehal Meshram, senior analyst (manager research), Morningstar Investment Research India.
The recovery in the equity market led to gains in the industry's assets under management (AUM) despite debt funds logging over Rs 2 trillion outflow. AUM rose to Rs 65.7 trillion from Rs 64.5 trillion in February.
Despite the slowdown in the last few months of the financial year 2024-25 (FY25), the industry witnessed record inflows into equity schemes during the year. Active equity schemes’ inflows more than doubled to Rs 4.2 trillion in FY25.
"The industry has demonstrated resilience and growth, despite market volatility and global policy uncertainties driven by frequent US tariff changes. As of March 2025, we have seen a 31.85 per cent year-on-year (Y-o-Y) increase in folio count, with our AUM reaching Rs 65.74 trillion, up from Rs 53.40 trillion in March 2024," said Venkat Chalasani, chief executive, Amfi.
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