Equity MF Inflows Revive in June; Debt Withdrawals Keep Overall Flows Negative 

Equity mutual fund inflows rebounded in June, rising 26% on-month as investors increased allocations to equity schemes despite volatile market conditions. However, heavy withdrawals from debt-oriented funds kept the overall mutual fund industry's net flows in negative territory.

Data released by the Association of Mutual Funds in India showed net inflows into equity schemes increased to 289.73 billion rupees in June from 229.08 billion rupees in May.

In June, mid-cap funds attracted the highest inflows among equity categories at 60.90 billion rupees, followed by small-cap funds with 56.02 billion rupees and flexi-cap funds with 52.31 billion rupees. Large-cap funds received net inflows of 20.67 billion rupees.

Among the 11 equity categories, dividend yield funds and equity-linked savings schemes (ELSS) were the only segments to record net outflows, while the remaining categories continued to attract fresh investments.

Hybrid mutual fund schemes received net inflows of 128.93 billion rupees, indicating continued investor preference for asset-allocation products amid uncertain market conditions.

Debt-oriented mutual funds, however, witnessed net outflows of 1.09 trillion rupees in June due redemption at the quarter-end for advance tax payments. The withdrawals outweighed inflows into equity and hybrid schemes, resulting in an overall industry net outflow of 529.49 billion rupees. The industry had recorded net outflows of 640.21 billion rupees in May.

Gold ETFs returned to positive territory during the month, receiving net inflows of 34.43 billion rupees after witnessing net outflows of 7.25 billion rupees in May. The reversal in flows reflected renewed investor allocations to precious metals as part of portfolio diversification.

Despite the overall net outflow, the mutual fund industry's assets under management increased to 82.22 trillion rupees as of June 30 from 81.58 trillion rupees at the end of May. The rise in AUM was supported by mark-to-market gains in equity portfolios and continued net inflows into equity-oriented schemes.