Rs 2.36 lakh crore flows into mutual funds in July: Debt funds steal the show

The mutual fund industry returned to net inflows in July as debt schemes staged a sharp reversal. Equity inflows moderated, while investor preference stayed tilted towards flexi cap, mid cap and small cap funds.Indexation is a crucial method employed to account for inflation's impact on a capital asset's cost over time.The mutual fund industry made a strong comeback in July, recording net inflows of Rs 2.36 lakh crore after seeing outflows of Rs 52,937 crore in June, according to data released by the Association of Mutual Funds in India (AMFI).The sharp turnaround was largely driven by debt mutual funds, which saw a major reversal in investor flows during the month. Equity funds continued to attract money, although inflows slowed compared with June.DEBT FUNDS LEAD THE TURNAROUNDDebt mutual funds attracted Rs 1.88 lakh crore in July, compared with a net outflow of Rs 1.09 lakh crore in June. The swing of nearly Rs 3 lakh crore in debt fund flows was the biggest factor behind the industry's overall turnaround.Equity mutual funds, meanwhile, received Rs 24,697 crore in July. This was 14.8% lower than the Rs 28,973 crore they attracted in June. Despite the moderation, equity funds remained firmly in positive territory. In June, equity inflows had risen 26.5% from Rs 22,908 crore in May.Santosh Joseph, CEO of Germinate Investor Services, said the July numbers show that investors continue to favour diversified equity categories, even as the overall pace of inflows has moderated. “July’s mutual fund flow data is broadly in line with expectations, with investor interest in diversified equity categories remaining steady. Flexi cap has quietly become the bedrock of fresh diversified equity allocation, flows there have stayed rock steady, and the data backs that up,” Joseph said.MID AND SMALL CAPS REMAIN INVESTOR FAVOURITESWhile equity inflows slowed overall, the flow of money across different equity categories tells a more interesting story. According to Joseph, investors have been directing more money towards segments that have performed better in recent months, particularly mid- and small-cap stocks.“But the bigger story is that money is following performance. Markets bottomed out in March, and since then mid and small caps have led the recovery, comfortably outperforming the broader market, while large caps have lagged and dragged the index down. Flows have simply followed that pattern,” he said.Large-cap funds recorded net outflows in July, reversing the positive inflows seen in June. At the same time, allocations towards mid- and small-cap categories increased month on month.Joseph said this shift shows where investors are currently seeing better returns.“Large cap funds saw net outflows in July, a reversal from June’s positive inflows, while mid and small cap allocations have actually risen month on month. Flexi cap, mid cap and small cap together are now taking the lion’s share of fresh equity money, and that combination has become the dominant destination for investors,” he said.HYBRID FUNDS ALSO SEE MODERATIONHybrid mutual funds received Rs 11,491 crore in July, down 10.9% from Rs 12,893 crore in June.Despite the decline, the category continued to attract fresh money, suggesting that investors remained interested in funds that combine equity and debt exposure.Other schemes recorded net inflows of Rs 12,517 crore in July, compared with Rs 16,724 crore in June, marking a decline of around 25%.Solution-oriented schemes were among the few categories to see an increase in inflows. They attracted Rs 379 crore in July, up around 18% from Rs 321 crore in June.Closed-ended and interval schemes, however, continued to see withdrawals. They recorded net outflows of Rs 681 crore in July, although this was a significant improvement from the Rs 2,794 crore outflow in June.GOLD ETF INFLOWS SLOW SHARPLYGold ETFs continued to attract investors in July, but the pace of inflows slowed considerably.The category received Rs 1,559 crore during the month, nearly 55% lower than the Rs 3,443 crore inflow recorded in June.Gold ETFs had returned to positive territory in June after seeing a net outflow of Rs 725 crore in May.Overall, the July data shows that investors continued to put money into mutual funds, but their preferences varied sharply across categories. Debt funds drove the industry's headline numbers, while within equities, investors appeared to favour flexi-cap, mid-cap and small-cap funds over large-cap schemes.Joseph said the pattern is closely linked to recent market performance.“It’s a direct read through of where returns have been made over the last two to four months,” he said.- EndsPublished By: Jasmine anandPublished On: Aug 11, 2026 13:49 IST