Mutual funds, long seen as a way to participate in India’s growth story, witnessed a strong resurgence in demand in the previous month, with total inflows reaching ₹49,095 crore, marking a sharp 69% increase over May’s ₹29,108 crore and reflecting investors’ confidence in the Indian economy amid ongoing global growth concerns.
Among all asset classes, the equity segment continued to dominate inflows, which rose to ₹23,568 crore in June from ₹19,013 crore in May, registering a robust 24% month-on-month increase, as per AMFI data.
The hybrid funds also sustained their momentum with net inflows of ₹23,223 crore in June, up from ₹20,765 crore in May, driven by continued interest in arbitrage and multi-asset allocation strategies.
Meanwhile, the equity inflows were led by strong demand in Flexi Cap funds, which saw a 49% month-on-month surge to ₹5,733 crore. Small-cap funds witnessed a 25.2% increase in inflows to ₹4,024 crore, while mid-cap fund inflows jumped to ₹3,754 crore, marking a 33.7% rise compared to May.
Despite ongoing concerns that valuations in mid- and small-cap funds remain stretched, these categories continue to attract significant interest from retail investors. Experts point out that the primary reason behind these sustained inflows is the perception that these funds offer exposure to high-growth segments of the economy.
Retail investors eye high-growth sectors through mid- and small-cap funds: Experts
Mr. Dikshit Mittal, Senior Fund Manager – Equity at LIC Mutual Fund Asset Management, said investors are looking to gain exposure to some of the faster-growing segments of the economy, as reflected in their preference for mid-cap and small-cap funds.
“The broad-based rally in indices like the Nifty 50, accompanied by stronger gains in mid- and small-cap indices, has rekindled investor enthusiasm,” Dikshit observed. “It seems many investors were awaiting a decisive market cue to reallocate towards equities, a cue that emerged in June, prompting renewed participation.”
He further noted that the increasing preference for hybrid categories such as arbitrage funds, multi-asset allocation funds, and dynamic asset/balanced advantage funds indicates a strategic and balanced approach to portfolio construction.
Mittal added that the rise in SIP contributions and consistent net equity inflows continue to support the resilience of Indian equity markets in a volatile global environment.
Meanwhile, Ankur Punj, Managing Director and National Head at Equirus Wealth, remarked that the strong inflows into mid- and small-cap funds reflect growing investor confidence in India’s long-term growth narrative despite global uncertainties.
“The uptick in hybrid strategies also suggests that investors are increasingly seeking a balance between growth and risk mitigation, a healthy sign of evolving market maturity,” Ankur said. “With global rate cycles stabilising and India’s earnings season underway, we expect investor focus to remain strong on thematic and multi-asset categories heading into Q2 FY26.”
AUM tops ₹74 lakh crore
Amid a strong resurgence in inflows, the overall assets under management (AUM) of mutual funds swelled to ₹74.40 lakh crore at the end of June, marking a rise of ₹2.2 lakh crore from May’s ₹72.2 lakh crore. Equity AUM now accounts for 45% of the total, standing at ₹33.46 lakh crore.
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