AMFI data: MF inflows rise to ₹1.74 lakh crore in Oct as debt funds see strong inflows; equity flows dip 14%

India's mutual fund industry witnessed a strong recovery in net inflows in October 2026, attracting ₹1.74 lakh crore compared with net outflows of ₹1.33 lakh crore in September, driven largely by a sharp reversal in debt fund flows, according to the latest data released by the Association of Mutual Funds in India (AMFI).

Debt mutual funds attracted net inflows of ₹1.13 lakh crore in October, reversing outflows of ₹1.83 lakh crore in the previous month. The recovery was primarily driven by liquid and overnight funds, which typically witness significant flows at the beginning of a quarter following quarter-end withdrawals.

Equity mutual funds, meanwhile, continued to attract positive flows, although net inflows moderated nearly 14% month-on-month to ₹32,994 crore in October from ₹38,307 crore in September. Despite the decline, equity-oriented schemes continued to see substantial investor participation amid market volatility and concerns over valuations in certain market segments.

The mutual fund industry's total assets under management (AUM) increased to ₹83.39 lakh crore in October from ₹82.64 lakh crore in September, as per the AMFI data.

Himanshu Srivastava, Principal, Manager Research, Morningstar Investment Research India, said the moderation in equity fund inflows reflected some cooling in investor appetite for relatively riskier market segments, alongside a cautious approach amid market volatility, valuation concerns and global uncertainties.

"Nevertheless, the sustained inflows suggest that investors continue to look beyond near-term market developments and remain committed to equities as a long-term wealth creation avenue," he said.

Mid- and small-cap inflows moderate

Among equity categories, small-cap funds attracted net inflows of ₹6,408 crore in October, down from ₹9,039 crore in September. Mid-cap funds saw inflows of ₹4,893 crore, compared with ₹7,835 crore in the previous month.

Together, mid- and small-cap funds accounted for around 34% of total net equity inflows in October, against 44% in September, indicating some moderation in investor allocations to these relatively riskier market segments.

However, large & mid-cap funds emerged as the biggest equity fund category in terms of inflows, attracting ₹8,484 crore, nearly double the ₹4,271 crore recorded in September. Large-cap funds also witnessed an improvement in inflows to ₹1,032 crore from ₹859 crore.

Srivastava said the sharp improvement in large & mid-cap funds could reflect growing investor preference for strategies offering a balance between the relative stability of large-cap stocks and the growth potential of mid-cap companies.

Flexi-cap funds attracted ₹4,980 crore during the month, compared with ₹6,702 crore in September, while multi-cap funds received ₹2,978 crore against ₹3,860 crore.

Another notable development was the increase in inflows into contra funds, which attracted ₹1,694 crore compared with just ₹98 crore in September. In contrast, sectoral funds saw inflows decline sharply to ₹552 crore from ₹1,840 crore, while thematic funds attracted ₹1,162 crore against ₹1,800 crore in the previous month.

Srivastava said the changing composition of equity inflows, particularly the improvement in large & mid-cap funds alongside relatively lower investments in mid- and small-cap categories, could indicate a gradual shift towards more balanced equity exposure. However, he cautioned that it would be premature to conclude that this represents a sustained change in investor preferences.

Liquid, overnight funds drive debt inflow reversal

Debt mutual funds recorded net inflows of ₹1,13,438 crore in October after witnessing withdrawals of ₹1,83,156 crore in September. Liquid funds accounted for the bulk of the inflows at ₹70,534 crore, while overnight funds attracted ₹54,893 crore. Money market funds added another ₹1,502 crore.

Neeraj Jain, Fund Manager – Fixed Income, The Wealth Company Mutual Fund, attributed the reversal largely to the seasonal movement of money at the beginning of a new quarter.

"Debt mutual funds saw net inflows of ₹1,13,438 crore in October (September: outflows of ₹1,83,156 crore), as the quarter-end outflows reversed seasonally with the start of a new quarter," he said.

However, not all debt categories witnessed positive flows. Ultra-short-duration funds and low-duration funds recorded outflows of ₹1,879 crore and ₹3,582 crore, respectively.

Duration-oriented categories also continued to see withdrawals, led by corporate bond funds at ₹3,143 crore, short-duration funds at ₹2,093 crore and banking & PSU debt funds at ₹1,238 crore.

Jain said higher crude oil prices, the RBI rate hike and tightening liquidity following the moderation in FCNR(B) inflows had pushed domestic bond yields higher across the yield curve.

Hybrid funds return to inflows

Hybrid mutual funds recorded net inflows of ₹3,514 crore in October, reversing outflows of ₹457 crore in September. The turnaround was largely driven by arbitrage funds, which attracted ₹3,929 crore after witnessing quarter-end redemptions.

Multi-asset allocation funds and aggressive hybrid funds continued to attract investments of ₹1,515 crore and ₹355 crore, respectively, although inflows were lower than in September. Balanced advantage funds and equity savings funds, meanwhile, recorded outflows of ₹853 crore and ₹1,133 crore, respectively.

In the passive fund segment, equity exchange-traded funds (ETFs) attracted ₹12,974 crore. Silver ETFs saw inflows rise to ₹3,092 crore, while gold ETFs attracted ₹3,474 crore, with inflows moderating during the month.

(DISCLAIMER: The views and opinions expressed by investment experts on fortuneindia.com are either their own or of their organisations, but not necessarily that of fortuneindia.com and its editorial team. Readers are advised to consult certified experts before taking investment decisions.)