Gross equity inflows also saw a reduction of 18 per cent, falling from Rs 66,630 crore in January 2025 to Rs 54,428 crore in February.
The sell-off in the stock market has dealt a heavy blow to the mutual fund industry with assets of retail investors in various funds plummeting by Rs 2.33 lakh crore and inflows into small-cap and mid-cap schemes plunging by up to 34.9 per cent in the month of February.
Highlighting the vulnerability of mutual fund investments to market volatility, retail assets under management (AUM), including equity, hybrid and solution-oriented schemes, plummeted to Rs 36,44,112 crore in February from Rs 38,77,595 crore in January this year, according to figures released by the Association of Mutual Funds in India (AMFI).
This decline occurred during a period of significant market correction due to multiple external factors primarily global trade tensions created by uncertainty on US tariffs. “This resulted in the benchmark BSE Sensex TRI experiencing a month-on-month decline of over 5.5 per cent,” said Jatinder Pal Singh, CEO, ITI Mutual Fund.
Significantly, mutual fund industry’s overall AUM declined by Rs 2.71 lakh crore to Rs 64,53,493 crore in February 2025 as against Rs 67,25,449 crore in January. While net investments in the small-cap fund category decreased by 34.9 per cent to Rs 3,722.46 crore, and inflows into mid-cap funds fell by 33.8 per cent to Rs 3,406.95 crore, large-cap funds experienced a more modest decline of just 6.4 per cent, reaching Rs 2,866 crore.
Gross equity inflows also saw a reduction of 18 per cent, falling from Rs 66,630 crore in January 2025 to Rs 54,428 crore in February. This asset price reduction comes on the backdrop of global uncertainties and macroeconomic factors which has caused the benchmark indices Nifty 50 and BSE Sensex to decline by approximately 6 per cent. “However, investors continue to repose faith in the industry despite these turbulent times, net equity inflows have remained positive for the last 48 months, witnessing Rs 0.29 lakh crore net inflows in February 2025 with all equity categories registering net inflows for the month. Further, the net inflows declined by 26 per cent as compared to January 2025,” said Sanjay Agarwal, Senior Director, CareEdge Ratings.
In January also, the net AUM of equity mutual funds plummeted by Rs 1.1 lakh crore, or 3.26 per cent, on a month-on-month basis, to Rs 29.46 lakh crore as of end-January 2025.
According to AMFI, SIP assets were at Rs 12,37783 crore for the month of February. SIP contribution for the month stood at Rs 25,999 crore.
It seems the downfall in the AUM of large-cap funds is over. The market share of large cap AUM kept falling from 17 per cent in October 2021 to 11.7 per cent in December 2024, and now finally rose to 12.2 per cent in February 2025.
“We had anticipated this rise and now it is playing out. This is led by inflows of Rs 2,866 crore in month of February. When times are volatile, it is large cap category that is the preferred investment destination,” said Viraj Gandhi, CEO, SAMCO Mutual Fund.
The party in small-cap schemes which started post Covid has now taken a halt and its market share in the total AUM fell from 10.8 per cent in December 2024 to 10 per cent in February 2025. This indicates a sharp cut of 9 per cent in two months due to fall of almost 10 per cent in small-cap index during this time.
Meanwhile, Gold ETF category recorded net inflows of Rs 1,979 crore in February 2025, significantly lower than the Rs 3,751 crore inflows in January. “The decline in inflows can be attributed to profit booking, as gold surged to an all-time high last month, prompting investors to lock in gains. Additionally, equity market corrections presented attractive buying opportunities, leading some investors to shift focus from gold ETFs to equities,” said Nehal Meshram, senior analyst—manager research, Morningstar Investment Research India.