3 weeks ago
Large-Cap Mutual Funds See First Outflows in Nearly Three Years
Mutual funds are like big piggy banks where many people put their money together to invest in stocks and bonds.
A large-cap fund buys shares of very big, well-known companies, while small-cap and mid-cap funds invest in smaller companies.
In July, for the first time since December 2023, investors in India pulled money out of large-cap funds.
At the same time, they put more money into small-cap and mid-cap funds, which were doing better than the rest of the market.
Overall, new money flowing into equity mutual funds fell by about 15% from June to July.
Foreign investors came back to Indian stocks in July after four months, which gave local investors a chance to book profits.
Regular monthly savings plans, called SIPs, stayed very popular, with more than Rs 30,000 crore coming in for a fifth month in a row and about 1.1 million new plans added.
Money also flowed back into bond funds, and the whole mutual fund industry took in about Rs 2.4 lakh crore in new money during the month.
Finance Minister Nirmala Sitharaman has said personal payments will not cost more, but industry leaders say it is too early to know if any new charges on UPI payments will affect investments.
Large-cap mutual funds posted their first monthly outflow since December 2023, with investors withdrawing about Rs 1,322 crore in July.
Overall inflows into equity-oriented mutual funds fell about 15% month-on-month to Rs 24,697 crore in July, from Rs 28,973.41 crore in June.
Small-cap funds attracted Rs 7,767.50 crore in July (up 38.7% month-on-month) and mid-cap funds took in Rs 6,192.31 crore, as investors favoured higher-growth segments.
SIP contributions stayed above Rs 30,000 crore for a fifth straight month at Rs 31,961 crore, with 1.1 million new SIPs taking the total to 99 million.
Debt scheme flows turned positive at about Rs 1.88 lakh crore, lifting the industry's net inflows to Rs 2.4 lakh crore, while net assets rose 4.3% to Rs 85.76 lakh crore.
- Who
- Indian mutual fund investors, the Association of Mutual Funds in India (AMFI), and industry executives including AMFI chief executive Venkat N Chalasani.
- What
- Large-cap mutual funds saw their first monthly outflow since December 2023, while mid- and small-cap funds attracted more inflows and debt scheme flows turned positive.
- Where
- India
- When
- July
- Why
- Foreign investors returned to Indian stocks after four months as shocks from West Asia eased, allowing local investors to book profits, while investors shifted towards mid- and small-cap funds seen as offering stronger growth potential.
Caution on equity funds
Healthy rebalancing
Outlook on equity mutual fund flows
Caution on equity funds
Executives such as Akhil Chaturvedi of Motilal Oswal Asset Management Company take a cautious view of equity-oriented funds, citing lower returns over the past two years and pointing to flows shifting towards low-risk, absolute-return products like special investment funds (SIFs) and arbitrage funds.
Healthy rebalancing
Others, including Ankur Punj of Equirus Wealth, see healthy ongoing portfolio rebalancing amid evolving valuations, with investors favouring mid- and small-cap segments for stronger long-term return potential while staying mindful of risks; Mirae Asset's Suranjana Borthankur added that the moderation reflects less urgency to buy dips after the market recovery.
Possible charges on UPI transactions
Caution on equity funds
Finance Minister Nirmala Sitharaman has assured that personal transactions will not face higher costs from any UPI charges.
Healthy rebalancing
AMFI chief executive Venkat N Chalasani says the industry will 'wait and watch', noting there is no clarity yet on how much transactions with or within businesses will be charged, so it is too early to judge the impact on investments.
Key facts
- Large-cap fund net flow (July)
- -Rs 1,322 crore (first outflow since December 2023)
- Large-cap fund net flow (June)
- +Rs 2,067.48 crore
- Equity mutual fund inflows
- Rs 24,697 crore in July vs Rs 28,973.41 crore in June (down ~15%)
- Small-cap fund inflows
- Rs 7,767.50 crore, up 38.7% month-on-month
- Mid-cap fund inflows
- Rs 6,192.31 crore
- SIP inflows (July)
- Rs 31,961 crore, fifth straight month above Rs 30,000 crore
- Debt scheme flows (July)
- +Rs 1.88 lakh crore (one report cites Rs 1.87 lakh crore)
- Industry net inflows / net assets
- Net inflows of Rs 2.4 lakh crore; net assets of Rs 85.76 lakh crore (+4.3% vs June)
Quotes
Suranjana Borthankur, Head of distribution, Mirae Asset Investment Managers
Head of distribution at Mirae Asset Investment Managers
“Large-cap stocks have moved to reasonable valuations but are saturated at the moment in terms of growth potential. At a time when investors are handpicking growth-oriented stocks, we are seeing the blue chips see less interest, while money pours into mid- and small caps.”
indianexpress.com
“The trend (of fall in equity MF inflow) also highlights ongoing portfolio rebalancing amid evolving valuations, with investors favouring segments that offer stronger long-term return potential while remaining mindful of associated risks.”
indianexpress.com
Sources
Related news
Equity MF inflows fall 15%; small-cap funds hit record
Small-cap fund inflows jump 39%, debt funds rebound in July
Small-cap funds gain ₹7,768 crore; large-cap funds see first outflow
Four equity fund categories saw outflows in July despite gains
Mutual funds hit record inflows as smallcaps draw biggest share
Mutual fund inflows hit Rs 2.36 lakh crore in July
Flexi-cap funds attract nearly Rs 50,000 crore in 2026
Edelweiss Large & Mid Cap Fund Bets on Next Cycle
India’s Market Signals Reveal Bubbles Before Crashes—But Not All
Why SIPs Alone Cannot Guarantee Financial Security
Happiest Minds-ITC Infotech Merger Shows AI-Driven IT Shake-Up
