While Indian equities have been weighed down by substantial US tariffs, modest Q1 earnings, and sustained selling by overseas investors, domestic retail investors have maintained their confidence in the fundamentals of the economy, shrugging off these near-term headwinds as they pump record funds into mutual funds in July.
As per the data released by AMFI (Association of Mutual Funds of India) on Monday, August 11, equity fund categories witnessed the highest-ever monthly net inflow of ₹42,702 crore, aided by renewed interest in thematic and sectoral schemes and continued inflow into small-cap, mid-cap, and flexi-cap schemes.
Besides small- and mid-cap funds, large-cap funds saw net inflows of ₹2,125 crore, underscoring retail investors’ interest in these schemes amid the sharp market correction in recent months.
The monthly net inflow marked the 53rd consecutive month of gains, indicating that investors have been steadily pouring in money since February 2021. Additionally, healthy growth was witnessed in SIP (Systematic Investment Plan) inflow at ₹28,464 crore during the month, an increase from ₹27,269 crore in June.
These record inflows have helped cushion the Indian stock market against the impact of sharp overseas investor outflows. Apart from equity funds, debt funds recorded a strong net inflow of ₹1.06 lakh crore in July, as investors diversified away from bank fixed deposits, which have turned less attractive following multiple RBI rate cuts.
₹48.24 lakh crore AUM jump in just 5 years
Amid strong inflows into both equity and debt, the total assets under management (AUM) of mutual fund industry crossed ₹75 lakh crore for the first time in July, reaching ₹75.35 lakh crore.
Just half a decade ago, the mutual fund industry’s AUM stood was at ₹27.11 lakh crore, indicating an addition of ₹48.24 lakh crore in only five years, AMFI data showed. Looking further back, the AUM of the Indian mutual fund industry has increased more than sixfold in the past 10 years.
The industry first crossed the milestone of ₹10 lakh crore in May 2014, and in just about three years, the AUM more than doubled to ₹20 lakh crore by August 2017. The AUM crossed ₹30 lakh crore in November 2020 and has since tripled.
Meanwhile, equity mutual fund AUM has surged from ₹7.37 lakh crore to ₹33.27 lakh crore in the last five years, a remarkable growth of 351% and it now accounts 46% of the overall mutual fund industry’s AUM.
Mutual funds strengthen market foundation
Retail investors have been actively shifting their savings from traditional bank deposits to equities in recent years, aiming to participate in India’s growth story, with the majority opting for the mutual fund route to gain ownership in listed companies.
This participation has not only broadened the investor base but also provided a strong foundation for the market, encouraging many companies to raise funds through the stock market to capitalize on ongoing domestic demand. This process has expanded the overall size of the Indian stock market, with India becoming fourth largest stock market globally.
According to market experts, institutional inflows into the Indian stock market are expected to remain strong through the rest of 2025, led by higher participation from the retail segment, higher understanding of market volatility, and rising investment discipline, along with incrementally higher inflow from B-30 cities, said domestic brokerage firm InCred Equities.
“We remain optimistic over the mid- to long-term horizon amid improving geographic penetration as well as the rising popularity of mutual fund schemes, mainly among the young and mid-income investors,” said InCred.
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