Equity mutual funds witnessed a sharp recovery in investor interest during June, with inflows rising significantly after hitting a one-year low in May. Improved market sentiment, led by a strong rally in mid- and small-cap stocks, encouraged retail investors to increase allocations, while systematic investment plans (SIPs) also continued to attract steady investments.
According to data released by the Association of Mutual Funds in India (AMFI), equity mutual funds received net inflows of Rs 28,973 crore in June, marking a 26% increase from Rs 22,908 crore recorded in May. The previous month had seen inflows drop nearly 40% as geopolitical tensions in West Asia prompted investors to reduce fresh lump-sum investments.
Mid- and Small-Cap Funds Lead the Recovery
Mid- and small-cap mutual funds emerged as the biggest beneficiaries of renewed investor confidence. Together, these two categories attracted Rs 11,692 crore, accounting for nearly 40% of the total equity mutual fund inflows during the month.
Viraj Gandhi, CEO of Samco Mutual Fund, said investors gravitated towards segments that demonstrated resilience despite market uncertainty. According to him, the relatively stronger performance of mid- and small-cap stocks encouraged investors to increase exposure, while diversified and thematic funds witnessed comparatively lower preference.
SIP Investments Continue to Grow
Systematic Investment Plan (SIP) contributions also registered healthy growth in June. Monthly SIP collections rose 2.67% to ₹31,781 crore, compared with Rs 30,954 crore in May, reflecting continued investor confidence in disciplined, long-term investing.
The mutual fund industry’s overall assets under management (AUM) increased 0.8% to Rs 82.05 lakh crore. The rise was largely supported by gains in equity markets, which helped offset outflows from debt-oriented schemes.
Strong Market Performance Boosted Investor SentimentThe impressive performance of broader market indices played a key role in reviving inflows.
During June, the Nifty Midcap 150 advanced 4.8%, while the Nifty Smallcap 250 climbed 8.7%. In comparison, the benchmark Nifty index gained 1.4%.
The trend has been even more pronounced over the past three months. The Nifty Midcap 150 has delivered returns of 9.11%, while the Nifty Smallcap 250 has surged 15.34%. The Nifty, meanwhile, has risen only 1.3%, highlighting the stronger momentum in the broader market.
Category-Wise Equity Fund Inflows in June
Among various equity fund categories, mid-cap funds attracted the highest investments with Rs 6,090 crore, around 30% higher than their 12-month average. Small-cap funds followed closely, receiving Rs 5,602 crore, which was 19% above the one-year average.
Other major categories also posted healthy inflows:
Flexi-cap funds: Rs 5,231 crore
Large & mid-cap funds: Rs 4,321 crore
Multi-cap funds: Rs 3,070 crore
Large-cap funds: Rs 2,067 crore
Investor appetite for sectoral and thematic funds also improved. These schemes recorded inflows of Rs 1,469 crore in June, more than double the Rs 648 crore received in May.
Aggressive Hybrid Funds See Sharp Improvement
Hybrid mutual funds also witnessed stronger investor participation. Aggressive hybrid funds recorded net inflows of Rs 2,121 crore in June, a sharp jump from Rs 655 crore in the previous month, indicating growing investor willingness to take on equity exposure through balanced investment strategies.
