The Indian mutual fund industry ended August 2025 with assets of Rs 75.19 lakh crores compared to Rs 75.35 lakh crores in July 2025. The Industry witnessed net inflows of Rs 0.52 lakh crores, with debt schemes experiencing outflows of 8,000 crs and equity and hybrid schemes showing net positive inflows of Rs 33,430 crs and Rs 15,294 crs respectively. Equity schemes saw a decrease in assets to Rs 33.1 lakh crores. This was mainly due to the negative performance of the markets. Nifty 500 fell by 1.82% which followed a 2.83% dip in July 2025 and Nifty 50 fell by 1.21% with mid and small caps also in the red. One year returns for all indices are negative. Three and five year numbers continue to show healthy returns inspite of the near term blip.
Mutual Fund Industry Overview
🔹 Monthly flow and AUM trends:
Equity Mutual Funds :
– Net flows in equity schemes fell to Rs 33,430 crs from Rs 42,702 crs. This was mainly due to only two thematic NFOs in the month. Flows into large cap funds increased and those into small cap funds decreased. This is a good sign since small and mid caps are trading at levels higher than their average levels. SIP inflows were at Rs 28, 265 crs and though they were marginally lower than last month, the number is still a good one.
– Net inflows in various categories were as under and have declined compared to last month:
– Sectoral/Thematic Funds: ₹ 3,893 (9,426) crores
– Flexi-Cap Funds: ₹ 7,679 (7,654) crores
– Small-Cap Funds: ₹ 4,993 (6,484) crores
– Mid-Cap Funds: ₹ 5,331 (5,182) crores
There were two thematic fund New Fund Offers (NFOs) in August which collected Rs 1,422 crs.
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Debt Funds: Inflows due to the beginning of the financial year/quarter
📉 Key Trends in Debt Funds:
– Total debt fund AUM was ₹18.71 (18.75) lakh crore, a 0.2% decrease compared to last month but up by about 17% compared to last year.
Liquid Fund and Corporate Bond funds saw net outflows. There was also a dip in the net inflows into Money Market funds. These are the three largest debt fund categories. Overnight funds saw also saw positive inflows though almost half of the previous month. Due to increase in yields of 10 year G-secs, we might be seeing a flight to the safety of overnight funds. September is also to see monies flowing out of debt funds due to advance tax payments, tax return filing dates as well as it being the quarter end.
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Hybrid & Passive Funds:
– Hybrid funds’ assets increased to Rs 10.08 (10.03) lakh crs thus staying above the ten lakhs crore mark. A 17% increase over the last 12 months. Net inflows into hybrid funds stood at Rs 15,294 (20,879) crores, led by Arbitrage funds, which saw inflows of ₹ 6,667 (7,296) crores in August. Multi Asset funds saw a dip. These are the best funds to invest in at the moment.
📊 Hybrid Funds Inflows Breakdown:
– Multi-Asset Allocation Funds: ₹ 3,528 (6,197) crore
– Dynamic Asset Allocation/Balanced Advantage Funds: ₹ 2,316 (2,611) crore
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🧐 Way forward
Most indices have given a negative return over the last one year. The markets have been volatile too. Indian macros continue to be strong. The recent cut in GST rates as well as the cuts in income tax at the beginning of the year should aid consumption. The headwinds continue to be US tariffs as well as other policy related matters with other countries. Investors are suggested to continue investing via SIPs and STPs. Lumpsum investments in equities should be avoided. Arbitrage and short term debt funds can be used to park funds and moved to large cap or hybrid schemes over the next 8-12 months. The asset allocation to different asset classes should continue to be maintained.
About EquiZen
EquiZen, a registered mutual fund and PMS distributor, offering personalised financial solutions with a focus on safety and transparency. We aim to assist you to achieve financial freedom, the freedom to do what you want and achieve your dreams. We do not push financial products but believe in utilising them judiciously to meet your needs. Learn more at www.equizen.in or contact us via +91 9820605203 or sanjay@equizen.in.
