Equity mutual funds in India witnessed a robust surge in investor interest in June, with net inflows rising 24 per cent month-on-month to Rs 23,587 crore, according to data released by the Association of Mutual Funds in India (AMFI). This marks a sharp increase from Rs 19,013 crore in May, underlining continued confidence among investors in the equity market amid improving economic indicators and positive corporate earnings.
Flexi cap funds attracted the highest inflows during the month, receiving Rs 5,733 crore, a 49 per cent jump from Rs 3,841 crore in May. Small-cap funds followed with inflows of Rs 4,024 crore, while mid-cap funds saw Rs 3,754 crore in net additions. These segments, often favoured by retail and high-risk investors, are seeing growing interest due to their long-term growth potential and performance in a rising market.
Among the 11 sub-categories of equity mutual funds, all recorded inflows except for Equity Linked Saving Schemes (ELSS), which posted outflows for the third consecutive month. In June, ELSS funds witnessed Rs 556 crore in net withdrawals, reflecting waning investor appetite for tax-saving instruments in the current environment.
The debt mutual fund segment, though still facing pressure, showed signs of recovery. Total outflows from debt funds moderated to Rs 1,711 crore in June, compared to a steep Rs 15,908 crore in May. Half of the 16 debt fund sub-categories reported inflows, with short duration funds leading the pack by receiving Rs 10,276 crore. Money market funds followed with Rs 9,484 crore in inflows, while dynamic bond funds posted minimal interest, with only Rs 44 crore flowing in during the month.
Liquid funds, which saw strong inflows of over Rs 40,000 crore in May, experienced a significant reversal with outflows of Rs 25,196 crore in June. Overnight funds also recorded sizeable outflows of Rs 8,154 crore, while medium duration funds posted the smallest decline at just Rs 60.98 crore.
Hybrid mutual funds continued to gain traction among investors, with total net inflows rising 12 per cent to Rs 23,222 crore in June, up from Rs 20,765 crore in the previous month. Within this category, arbitrage funds remained the most preferred option, bringing in Rs 15,584 crore. Multi-asset allocation funds garnered Rs 3,209 crore, and dynamic asset allocation or balanced advantage funds attracted Rs 1,885 crore in net inflows during the same period.
Market experts attribute this consistent rise in mutual fund investments to strong retail participation, steady SIP flows, and broader optimism around India’s economic trajectory. The increasing interest in mid- and small-cap funds highlights a risk-on sentiment among investors who are seeking higher returns amid stable market conditions. Meanwhile, the tapering of outflows in debt categories signals improving confidence in fixed-income instruments, even as volatility persists in select segments.
As equity and hybrid mutual fund categories continue to outperform, industry watchers anticipate a sustained upward trend in mutual fund inflows in the coming months. The broad-based participation across asset classes suggests that mutual funds remain a key avenue for long-term wealth creation in India’s maturing financial landscape.