This trend underlines investors’ preference for short-duration instruments amid prevailing market volatility and interest rate uncertainties
FinTech BizNews Service
Mumbai, September 11, 2025: Association of Mutual Funds in India (AMFI) has on Wednesday released Mutual Fund Industry Monthly Data for August 2025.
Here are perspectives of experts from a MF house, an investment management firm, a Ratings agency, a B2M Wealth tech platform and a Stock Broker & Online Trading Platform.
Dr. Vikas Gupta, CEO & Chief Investment Strategist at OmniScience Capital:
“The largest flows in equity were in the flexicap category giving flexibility to the fund managers in terms of allocations across the market. However, if one looks at the total aum, the pure large cap has lower aum as compared to the midcap and just slightly higher than the smallcap aum. This is a matter of concern given that typically, large cap stocks as a percentage of overall market cap are approximately 70% under normal conditions and mid and small caps are approx 15%-20% and 10%-15%. This makes it clear that there is overallocation by retail into the midcap and smallcap categories. Nifty Midcap 50 is at a PE of 37, Nifty Midcap Select is at a PE of 47 and Nifty smallcap 250 is at PE of 33. Compare this to Nifty 50 is at PE of 22. The AUM data as well as the PE data clearly shows that there is overallocation to the midcaps and smallcaps and under-allocation to largecaps. Investors would do well to reconsider their allocation, but it looks unlikely until the large cap index significantly outperforms the mid and smallcap indexes prompting the FOMO and trend chasing behaviour of retail investors.”
Sanjay Agarwal, Senior Director, CareEdge Ratings:
The mutual fund industry’s assets under management (AUM) fell marginally by 0.2% month-on-month to Rs 75.19 lakh crore. Inflows slipped across the board compared to July and were offset by MTM losses. Net inflow of the mutual fund industry stood at Rs 52,442.8 crore, as compared to an inflow of Rs 1.79 lakh crore the previous month.
The debt mutual fund category witnessed outflows of Rs 7,979.8 crore in August 2025 compared to the strong inflows of Rs 1.06 lakh crore in July. The outflows were driven by liquid funds, which witnessed redemptions of Rs 13,350 crore along with other categories. On the other hand, inflows were witnessed in overnight funds of Rs 4,951 crore, in money market funds of Rs 2,210.5 crore inflows, Short-duration of Rs 565 crore and low-duration funds of Rs 477 crore. This trend underlines investors’ preference for short-duration instruments amid prevailing market volatility and interest rate uncertainties, as they seek safer avenues for parking surplus funds with relatively stable returns. Credit Risk Fund category has continued to witness outflows at a steady pace.
Open-ended equity mutual funds continued their 54-month long streak of positive inflows at Rs 33,430.4 crore underscoring sustained investor confidence and consistent inflows through SIPs despite prevailing market volatility. However, Dividend yield funds recorded outflows. There lower inflows compared to July can be attributed to higher collections under NFOs of Rs 0.3 lakh crore in July. During August 2025, 23 open-ended NFOs were floated which collectively mobilised Rs.0.03 lakh crore with sectoral/thematic funds accounting for 49.7% share.
Pankaj Shrestha, Head- Investment Services at PL Capital:
“In August 2025, despite the steepest-ever U.S. tariff shock and heightened market volatility, equity mutual funds recorded a robust net inflow of Rs33,430 crore — a clear reflection of investor confidence in India’s growth story.”
Jatinder Pal Singh, CEO, ITI Mutual Fund
“Equity mutual fund inflows dropped 21.7% in August to Rs33,430.37 crore from Rs42,702.35 crore in July. Still, large-cap funds grew 33% to Rs2,834.88 crore and mid-caps edged up 2.8% at Rs5,330.62 crore. ELSS funds turned positive with Rs59.15 crore inflows. These trends show steady investor confidence, backed by India’s solid economy and growth outlook.”
Jyoti Prakash, Managing Partner, Equity and PMS, AlphaaMoney:
It is commendable that in spite of tepid equity returns in recent quarters, SIP flows have remained steady. The MoM fall in overall flows is on account of fewer NFOs in August.
