Debt mutual fund outflows ease in June; short duration and money market schemes attract inflows

Debt mutual funds reported net outflows of ₹1,711 crore in June 2025. Although still negative, this was significantly lower than the ₹15,908 crore outflow seen in May, according to Association of Mutual Funds in India (AMFI) data.

The moderation in net outflows was supported by a recovery in several low- and medium-duration categories. Short duration funds recorded the highest inflows in the fixed income segment at ₹10,276 crore. Money market funds followed with ₹9,484 crore in net inflows.

Corporate bond funds continued to attract investor interest, adding ₹7,124 crore in June.

Nehal Meshram, Senior Analyst – Manager Research, Morningstar Investment Research India, said, “The stabilisation was supported by recovery in several low and medium duration categories, even as institutional-heavy segments like overnight and Liquid funds continued to witness redemption pressures.”
Overnight and liquid funds saw combined outflows of ₹33,350 crore, likely due to quarter-end liquidity requirements and treasury adjustments. Despite this, liquid funds closed the April–June quarter with the highest net inflows of ₹53,255 crore.

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Duration-heavy categories saw limited interest. Gilt funds reported outflows of ₹957 crore, while long duration funds witnessed redemptions of ₹445 crore. These categories had seen minor gains in May.

Morningstar noted that long duration funds have still managed net inflows of ₹5,928 crore over the past six months, indicating selective allocation by duration-focused investors.

While headline flows remained negative in June, fixed income mutual funds have reported net inflows of ₹1.21 lakh crore during the first half of FY2025, suggesting improving sentiment after a volatile FY2024.

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