Equity Mutual Fund Inflows Drop 14% in January 2026 as Debt and Hybrid Funds Gain Momentum
Mutual fund investment trends for January 2026 reflected a mixed picture across asset classes. While equity mutual funds witnessed a noticeable decline in inflows, debt and hybrid funds staged a strong comeback, indicating a shift in investor preferences amid changing market conditions.
Equity Mutual Funds See Moderation in Inflows
Equity mutual fund inflows declined by 14% month-on-month to Rs 24,028 crore in January 2026, compared with Rs 28,054 crore in December 2025. On a year-on-year basis, the slowdown was sharper, with inflows falling 39% from Rs 39,687 crore recorded in January 2025.
Despite the overall dip, investor interest remained strong in select equity categories:
- Flexicap funds led inflows with Rs 7,672 crore, retaining their position as the most preferred equity category.
- Midcap funds attracted Rs 3,185 crore, while large & mid-cap funds received Rs 3,181 crore.
- Smallcap funds saw inflows of Rs 2,942 crore.
However, ELSS funds reported outflows of Rs 593 crore, reflecting some profit booking and tax-related adjustments by investors.
Category-wise Monthly Trends
On a month-on-month basis, focused funds recorded a strong 47% rise in inflows, increasing to Rs 1,556 crore. Largecap funds and sectoral/thematic funds also posted growth of 28% and 10%, respectively.
In contrast, midcap and smallcap funds witnessed a cooling of interest, with inflows declining 24% and 23%, respectively.
Debt Funds Rebound After Two Months of Outflows
Debt mutual funds made a strong recovery in January 2026, registering inflows of Rs 74,827 crore after two consecutive months of heavy redemptions. In November and December 2025, the category had seen combined outflows of Rs 1.58 lakh crore.
However, on a year-on-year basis, debt fund inflows were still 42% lower than the Rs 1.28 lakh crore recorded in January 2025.
- Overnight funds topped the chart with inflows of Rs 46,280 crore.
- Liquid funds and money market funds attracted Rs 30,681 crore and Rs 12,763 crore, respectively.
- Corporate bond funds were the laggards, witnessing outflows of Rs 11,472 crore.
Hybrid Funds Witness Sharp Growth
Hybrid mutual funds saw a significant surge in investor interest. Monthly inflows jumped 61% to Rs 17,356 crore in January, compared with Rs 10,755 crore in December. On a yearly basis, inflows nearly doubled, rising 98% from Rs 8,767 crore.
Multi-asset allocation funds led the category with inflows of Rs 10,485 crore, followed by arbitrage funds at Rs 3,293 crore. Arbitrage funds recorded an exceptional 2,507% MoM jump in inflows.
Meanwhile, equity savings funds and conservative hybrid funds saw inflows decline by 81% and 35%, respectively.
Passive Funds and Gold ETFs Shine
Other schemes, including passive funds such as ETFs and index funds, recorded a 50% rise in inflows to Rs 39,954 crore. Gold ETFs stood out, attracting Rs 24,039 crore, marking a 106% month-on-month increase.
Additionally, fund-of-funds investing overseas saw a 501% jump in inflows to Rs 881 crore.
Overall Industry Snapshot
Total inflows into open-ended schemes stood at Rs 1.56 lakh crore in January, a sharp turnaround from an outflow of Rs 66,532 crore in December. Assets under management rose 1% month-on-month to Rs 80.76 lakh crore.
During the month, 12 new mutual fund schemes were launched, collectively mobilising Rs 1,939 crore, with money market funds contributing the most.
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