Asset Management companies will remain in focus in Thursday’s trading session after equity mutual fund inflows declined 22 per cent in August 2025.
AMC stocks like Motilal Oswal Financial Services, HDFC Asset Management Company, Nippon Life India Asset Management shares closed up to 4 per cent higher on Wednesday as the data were released after the market hours.
dropped 22 per cent in August to ₹33,430 crore, compared to ₹42,702 crore in July. A year earlier, in August 2024, inflows stood at ₹38,239 crore.
Within the 11 sub-categories, flexi cap funds attracted the highest inflows at ₹7,679 crore, followed by midcap funds with ₹5,330 crore and smallcap funds with ₹4,992 crore during the month.
On a month-on-month basis, most categories saw a slowdown in inflows, except for largecap, midcap, and flexi cap funds, which recorded growth of 33 per cent, 3 per cent, and 0.3 per cent respectively.
“AMFI data for August shows sharp decline in and dip in SIP inflows. Although positive equity flows continued for 54th straight month, month on month there was a dip of 22%. This is more of a reflection of global macros than domestic factors, tariff news heightened volatility in the markets leading to cautious approach by investors.
Small Cap Fund inflows dropped by 23% due to volatility and valuation concerns whereas Mid and Flexi Cap held strong. Healthy SIP inflows reflect confidence that retail investors have in Markets and this will continue to drive the markets with SIPs contributing 20% to industry AUM. With GST reforms that Government has announced, we will see strong domestic consumption driving up corporate earnings. GST measures coupled with Income Tax reduction that Govt had announced earlier and RBIs liquidity measure, will drive the market flows upwards,” said Ankur Punj MD and Business Head Equirus Wealth.
What led to decline in equity mutual fund inflows in August 2025?
According to Hariprasad K, SEBI-registered Research Analyst and Founder of Livelong Wealth, the sharp 22 per cent dip in last month can mainly be attributed to flat Nifty returns, misplaced SIP expectations, and the lure of alternatives like gold and global equities.
Nifty’s flat returns
One of the key reasons for the cooling enthusiasm is the market itself. Over the past year, the has delivered near-zero returns, despite its decade-long track record of compounding at a healthy 12–13 per cent CAGR.
“For many new-age investors, drawn into equities with the promise of double-digit returns, the flat performance has come as a disappointment. The mismatch between long-term equity potential and short-term reality often leads to frustration, particularly among first-time mutual fund participants,” Hariprasad K said.
Misunderstood Expectations
He also added that the surge of systematic investment plan (SIP) accounts in recent years has been a structural positive but many investors appear to have entered mutual funds with mis-sold or misunderstood expectations by treating 12 per cent CAGR as an annual guarantee rather than a long-term average. When the markets stall, this misplaced expectation can quickly turn into disillusionment. The August slowdown in SIP inflows, slipping 1 per cent to ₹28,265 crore, reflects this undercurrent of doubt.
Alternative assets
The global investment landscape is also influencing domestic sentiment. The US equity markets have outperformed in recent months, while gold has delivered record-breaking returns, aided by geopolitical tensions. Against this backdrop, domestic investors comparing one-year returns may see safer assets like fixed deposits, bonds or even overseas equities and gold as more rewarding than the Nifty’s stagnation.
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