In October, the interest of investors in equity mutual funds decreased despite market growth. Data from the Association of Mutual Funds in India (AMFI) revealed that inflows into equity funds dropped by 19% to Rs 24,691 crore, down from Rs 30,422 crore in September.
Even as the Nifty 50 and Sensex rose by nearly 4% during the month, the positive market performance did not translate into higher investments in equities.
FLEXICAP LEADS, MID AND SMALL-CAPS DECLINE
Within different equity categories, most funds attracted investments, but with varying levels of momentum. Flexicap funds stood out as the most popular choice, gathering Rs 8,928 crore, marking a substantial 27% increase from the previous month.
Conversely, interest waned in mid and small-cap funds. Inflows into mid-cap funds decreased by 25% to Rs 3,807 crore, while small-cap funds saw a 20% decline to Rs 3,476 crore.
Two specific categories, dividend yield and ELSS (tax-saving funds), continued to face challenges. Dividend yield funds experienced outflows of Rs 178 crore for the third consecutive month, while ELSS funds recorded outflows of Rs 665 crore.
EXPERT PERSPECTIVE: INVESTORS BECOME MORE SELECTIVE
Reflecting on this trend, Jatinder Pal Singh, the CEO of ITI Mutual Fund, remarked, “Equity mutual fund inflows declined for the second consecutive month in October 2025, falling by 19% to Rs 24,690 crore from Rs 30,421 crore in September. Despite the overall slowdown, most of the 11 sub-categories continued to attract inflows.”
Singh highlighted that Flexicap funds remained the preferred choice for investors, while interest in mid and small-cap funds softened.
DEBT FUNDS MAKE A STRONG COMEBACK
While equity investments slowed down, debt funds experienced a significant resurgence. After two months of withdrawals, debt funds saw inflows of Rs 1.59 lakh crore in October. Leading the pack were liquid funds with Rs 89,375 crore, followed by overnight funds at Rs 24,050 crore.
However, long-duration funds witnessed the largest outflow of Rs 942 crore. Out of the 16 debt categories, only a few, such as gilt, credit risk, and floater funds, reported outflows.
HYBRID FUNDS GAIN POPULARITY
Another notable trend was the increasing interest in hybrid funds, which experienced a 51% surge in inflows to Rs 14,156 crore, up from Rs 9,397 crore in September. Arbitration funds led this segment by attracting Rs 6,919 crore, followed by multi-asset allocation funds at Rs 5,344 crore.
“Flexicap funds emerged as the top choice for investors, witnessing a 27% increase in inflows,” Singh emphasized, highlighting the shift in investor preferences amidst market uncertainties.
GOLD ETFs SHINE IN PASSIVE FUNDS
Passive investment options, including index funds and ETFs, experienced a 13