Equity Mutual Fund Inflows Rise to Rs.25,977 Crore in February; Mid- and Small-Cap Funds Attract Strong Buying

Investor enthusiasm for equity mutual funds remained strong in February, with fresh data released by the Association of Mutual Funds in India (AMFI) showing that equity fund inflows increased 8% month-on-month to Rs.25,977 crore. The steady inflows highlight continued retail participation despite market volatility and global uncertainties.

A notable trend during the month was the strong surge in mid-cap and small-cap fund inflows, suggesting that investors continue to allocate funds to higher-growth segments of the market.

Mid-cap funds recorded Rs.4,003 crore in inflows, a sharp 26% rise from January, while small-cap funds attracted Rs.3,881 crore, up 32% from the previous month. This indicates that investors are willing to take calculated risks to capture long-term growth opportunities.

Large-cap funds, however, saw only a modest improvement, with inflows increasing slightly to Rs.2,112 crore in February from Rs.2,005 crore in January. Meanwhile, flexi-cap funds, which allow fund managers to invest across market capitalisations, saw inflows decline to Rs.6,924 crore from Rs.7,672 crore.

Category-wise Equity Fund Inflows

February also saw significant activity in the new fund launch space. A total of 21 New Fund Offers (NFOs) were launched during the month, collectively mobilising Rs.4,979 crore. These launches included eight equity funds, four index funds, one dynamic asset allocation fund and seven exchange-traded funds (ETFs).

Index Funds Surge; Gold ETFs See Sharp Decline

Passive investment strategies gained traction during the month. Index mutual funds saw inflows jump to Rs.3,233 crore, compared with a negligible Rs.27.30 crore in January.

In contrast, gold ETFs witnessed a sharp moderation in inflows, declining to Rs.5,255 crore in February from Rs.24,040 crore in January, following a cooling in gold prices. Other ETFs also recorded lower inflows, dropping to Rs.4,487 crore from Rs.15,005 crore, according to AMFI data.

Debt and Hybrid Categories Witness Decline

While equity funds remained resilient, several other categories experienced weaker inflows.

Debt mutual funds across durations saw inflows fall sharply to Rs.42,106 crore in February from Rs.74,827 crore in January.

Similarly, inflows into multi-asset allocation funds declined to Rs.8,476 crore from Rs.10,485 crore, while balanced advantage funds recorded inflows of Rs.1,521 crore, down from Rs.1,839 crore in the previous month.

Experts Highlight Resilient Retail Participation

Market experts believe the February numbers underline the growing maturity and resilience of Indian retail investors.

Himanshu Srivastava of Morningstar Investment Research India noted that the strong inflows into mid-cap and small-cap funds indicate that investors continue to allocate selectively to higher-growth segments despite valuation concerns.

Feroze Azeez, Joint CEO at Anand Rathi Wealth, said the data reflects the steadfast participation of retail investors in equities even during volatile market phases. He also highlighted that Systematic Investment Plan (SIP) contributions remained close to the Rs.30,000 crore mark, signalling increasing financial discipline among investors.

Nitin Agrawal, CEO – Mutual Funds at InCred Money, observed that equity categories continue to attract strong allocations as investors seek opportunities in segments that have witnessed corrections and now offer relatively better value.

Ovas Bakshi, Head – Retail Sales at Kotak Mahindra AMC, added that equity inflows remained robust at around Rs.26,000 crore in February, reaffirming the confidence of retail investors in equities as a preferred long-term wealth creation avenue.