2 weeks ago
Four equity fund categories saw outflows in July despite gains
A mutual fund is like a big jar where many people put their money together to buy stocks.
In July 2026, people took some money out of certain jars — the ones that buy big company stocks, dividend-paying stocks, value stocks, and tax-saving funds.
Even so, the money left inside most of these jars grew a little during the month.
Investors moved their money into jars that buy smaller company stocks, because those had been doing well recently.
Some people also took money out of tax-saving funds after their required three-year waiting time ended.
Experts say one month of taking money out is not a reason to panic.
Chasing whatever is doing well right now can be risky.
They advise spreading money across different kinds of funds for the long run.
Large-cap, dividend yield, value/contra, and ELSS funds recorded net outflows in July 2026 even as most delivered positive returns.
Large-cap funds saw the biggest outflow of ₹1,322 crore, after ₹2,067 crore of inflows in June 2026.
ELSS outflows of ₹959 crore were linked to post-tax-season redemptions, expiring three-year lock-ins, and preference for the new tax regime.
Investors shifted toward mid- and small-cap funds, which attracted ₹6,192 crore and ₹7,768 crore respectively in July.
Experts caution against treating one month of outflows as an exit signal and warn that recency bias can lead investors to over-allocate to trending segments.
Large-cap funds delivered average returns of 2.4% in July, up from 1.9% in June, showing flows and returns do not always move together.
- Who
- Indian mutual fund investors, along with experts Jasmeet Singh of Anand Rathi Wealth and Aditya Agarwal of Wealthy.in
- What
- Four equity mutual fund categories — large-cap, dividend yield, value/contra, and ELSS — saw net outflows in July 2026 despite mostly positive returns
- Where
- India's mutual fund industry
- When
- July 2026, based on AMFI data
- Why
- Investors shifted toward mid- and small-cap funds after market corrections, while ELSS withdrawals reflected post-tax-season redemptions, expiring lock-ins, and the growing preference for the new tax regime
Investors favouring recent winners
Experts urging long-term discipline
Where to put money
Investors favouring recent winners
Investors are moving funds into mid- and small-cap segments, which delivered stronger recent performance and attracted ₹6,192 crore and ₹7,768 crore respectively in July.
Experts urging long-term discipline
Experts caution that recency bias can lead investors to chase performance and over-allocate to trending segments after just a short run.
Reacting to one month of outflows
Investors favouring recent winners
July's outflows reflect investors rebalancing toward segments with better recent returns as market valuations became more reasonable after corrections.
Experts urging long-term discipline
Experts say one month of outflows is not a signal to exit; large-cap, value, and dividend-yield funds serve different roles in a diversified portfolio, while ELSS remains a tax-saving product with a three-year lock-in.
Key facts
- Large-cap fund July flows
- -₹1,322 crore (outflow)
- ELSS fund July flows
- -₹959 crore (outflow)
- Value/contra fund July flows
- -₹145 crore (outflow)
- Dividend-yield fund July flows
- -₹169 crore (outflow)
- Small-cap fund July inflows
- ₹7,768 crore
- Mid-cap fund July inflows
- ₹6,192 crore
- Large-cap fund average July return
- 2.4%
- Data source
- AMFI
Quotes
Aditya Agarwal
Co-Founder, Wealthy.in
“It is mainly due to investors' shift towards broader segments such as mid- and small-caps as markets recovered and valuations became more reasonable following the recent corrections.”
livemint.com
“Dividend-yield funds saw limited appetite for defensive strategies, while ELSS outflows reflected post-tax-season redemptions and its three-year lock-in.”
livemint.com
Sources
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