Equity Inflows Slump to 11-Month Low While SIP Stoppage Ratio Hits Record 127%
India's mutual fund industry presented a mixed picture in March 2025, with overall assets under management (AUM) growing robustly while equity inflows declined significantly amid increased market volatility. The monthly data released on April 11 reveals several interesting trends that warrant attention from investors and market participants.
Record AUM Growth Despite Equity Inflow Slowdown
The mutual fund industry's total assets under management increased by 23.11 percent year-on-year to reach Rs 65.67 lakh crore in March 2025. However, equity mutual funds recorded their lowest inflows in 11 months at Rs 25,082 crore, signaling growing investor caution amid volatile market conditions.
Industry experts attribute this decline to multiple factors including year-end redemptions and profit-booking tendencies. "We believe profit booking was a major contributor. April outflows would be a better indicator to watch for gauging investor sentiment," noted Akhil Chaturvedi, Executive Director & Chief Business Officer at Motilal Oswal AMC.
Market analysts also pointed to increased volatility triggered by US-China trade tariff concerns as a factor that prompted heightened investor caution. Additionally, fewer new fund offers (NFOs) during March contributed to the lower equity inflows.
Key Highlights from March's AMFI Report
1. SIP Contributions Hit Record High Despite Rising Stoppage Ratio
Systematic Investment Plans (SIPs) continued their impressive growth trajectory, with monthly inflows reaching an all-time high of Rs 25,926 crore in March—a substantial 34.53 percent increase year-on-year. This robust growth pushed total SIP assets to Rs 13.35 lakh crore, representing 20.3 percent of the industry's total AUM.
However, a concerning trend emerged with the SIP stoppage ratio hitting a record 127.5 percent in March, up from 122 percent in February. This means more investors discontinued their SIPs than initiated new ones—51 lakh accounts were closed compared to just 40 lakh new registrations. Total SIP accounts marginally decreased from 10.16 crore to 10.05 crore.
According to AMFI's CEO Venkat Chalasani, this high stoppage ratio primarily reflects the removal of inactive accounts as mandated by SEBI regulations rather than a fundamental shift in investor behavior.
2. Large-Cap Funds Experience Outflows While Mid and Small Caps Remain Popular
Large-cap funds witnessed significant outflows of Rs 2,479 crore in March, though their AUM still rose from Rs 3.25 lakh crore to Rs 3.59 lakh crore due to market appreciation. This contrasts sharply with the continued enthusiasm for small-cap and mid-cap funds, which attracted inflows of Rs 4,092 crore and Rs 3,439 crore respectively.
Experts suggest investors may be redirecting their large-cap allocations to flexi-cap and multi-cap categories, which provide exposure to large-caps while also offering diversification across market capitalizations.
"Continued incremental inflows were mainly seen in Flexicap, Smallcap and Multicap, which is a positive sign, indicating a long-term investment approach by investors despite global and macroeconomic concerns," observed Jatinder Pal Singh, CEO of ITI Mutual Fund.
3. Thematic and Sectoral Funds Losing Momentum
After enjoying strong growth throughout the year, thematic and sectoral funds showed signs of losing investor interest in March. While the category's AUM increased from Rs 4.27 lakh crore to Rs 4.55 lakh crore year-on-year, March inflows plummeted to just Rs 170 crore, down dramatically from Rs 5,712 crore in February 2025.
Industry observers attribute this sharp decline to heightened market volatility, underperformance of certain sectoral schemes, and disappointing GDP and corporate earnings data.
4. Gold ETFs Record Surprise Outflows
In an unexpected development, gold ETFs registered net outflows of Rs 77 crore in March, a stark reversal from the Rs 1,980 crore inflows recorded in February. Despite these outflows, the category's AUM rose to Rs 58,888 crore due to appreciation in gold prices.
Market analysts remain optimistic about gold's long-term prospects. "Gold is long seen as a hedge against inflation—and it will continue to be a favoured asset class. The dip we saw this month is largely a result of profit booking," explained Nehal Meshram, Senior Analyst at Morningstar Investment Research India.
As markets navigate through ongoing volatility and geopolitical uncertainties, April's data will be closely watched for signs of changing investor sentiment and possible recovery in equity inflows.
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