Equity MF inflow hit record high of Rs 42,702 cr in July; industry's AUM crosses Rs 75 lakh cr

New Delhi: Equity-oriented mutual funds garnered a net inflow of Rs 42,702 crore in July, making it the highest-ever monthly tally for the segment, propelled by contributions from thematic and flexi cap funds, despite heightened market volatility plagued by tariff war with the US.

This was a sharp 81 per cent surge from Rs 23,587 crore inflow registered in June, suggesting a clear resurgence in domestic risk appetite. Also, the latest fund infusion by investors marks the 53rd consecutive month of net inflows into the segment.

Additionally, a healthy growth was witnessed in SIP (Systematic Investment Plan) inflow at Rs 28,464 crore during the month under review, an increase from Rs 27,269 crore in June, data released by the Association of Mutual Funds in India (Amfi) showed on Monday.

"Despite uncertainties due to tariff war, India's growth story remains intact -- which is evident in strong inflow in equities -- backed by benign inflation, improved liquidity, improved savings," Venkat N Chalasani, CEO of Amfi, told PTI.

Himanshu Srivastava, Principal, Manager Research at Morningstar Investment Research India, believes that intermittent market corrections during the month on the back of tariff war with the US, as well as ongoing geopolitical tension, which offered investors attractive entry points.

Among equity-oriented mutual fund categories, Sectoral or Thematic funds topped the charts with a net inflow of Rs 9,426 crore, fuelled by the launch of seven new schemes that collectively garnered Rs 7,404 crore. This was followed by Flexi-Cap funds which attracted Rs 7,654 crore, supported by their versatile mandate to capture opportunities across market capitalisations, which continues to resonate with investors.

In addition, Small Cap Funds (Rs 6,484 crore) and Mid Cap Funds (Rs 5,182 crore), Large & Mid Cap Fund (Rs 5,035 crore) registered robust inflows. Besides, Large Cap Funds saw net inflows of Rs 2,125 crore. Barring equity-linked saving schemes (ELSS), which saw net outflows of Rs 368 crore, all other equity categories reported inflows.

"Strong corporate earnings, a steady macroeconomic backdrop, and expectations of a gradual monetary easing cycle kept investors engaged, particularly in growth-oriented categories such as flexi, mid, and small caps," Srivastava said.

Overall, the mutual fund industry experienced an infusion of Rs 1.8 lakh crore in July, higher than Rs 49,000 crore in June and Rs 29,000 crore in May. This was driven by robust participation across categories, especially in debt, followed by equity.

The strong inflow has lifted the industry's assets under management to surpass Rs 75 lakh crore for the first time. The asset base rose by 1.3 per cent to Rs 75.36 lakh crore as of July from Rs 74.4 lakh crore at the end of June despite pressures from strong US Dollar and persistent foreign fund outflows, Amfi's Chalasani said.

Debt funds have staged a strong comeback, with Rs 1.06 lakh crore inflows, led by low-duration and money market funds, alongside steady inflows in liquid and overnight funds. This came following a net outflow of Rs 1,711 crore in June.

In addition, Gold ETFs (exchange traded funds) witnessed a net inflow of Rs 1,256 crore in July, moderating from the robust Rs 2,081 crore seen in the preceding month but still marking the third consecutive month of positive flows.

"The sustained demand reflects gold's continued appeal as a portfolio diversifier amid lingering macro uncertainties, including volatile global interest rate expectations and geopolitical risks," Nehal Meshram, Senior Analyst - Manager Research at Morningstar Investment Research India, said.