Equity-oriented mutual fund categories recorded net inflows of ₹24,690 crores in October 2025. While this is a decent net inflow in absolute terms, it was lower than the ₹30,422 crore recorded in September 2025. This marked the third consecutive month of moderation in net inflows into the equity categories.

“The slowdown in inflows could be due to profit booking by investors following the sharp surge in equity markets and the festive season. Although the pace of inflows has softened, the overall trend still indicates sustained investor confidence in equities,” says Himanshu Srivastava, Principal Research, Morningstar Investment Research India.

Within categories, Flexi-cap funds led decisively for the third consecutive month with ₹8,928 crore (up from ₹7,029 crore in September), indicating that investors preferred broad, manager-driven diversification amid changing market conditions. This also highlights investors’ preference for funds that offer exposure across different market caps. The category also saw the launch of one new fund, which attracted net assets of ₹1,684 crores.

Mid-cap (₹3,807 crore) and small-cap (₹3,476 crore) categories continued to experience positive inflows, though at a slower pace than in September, as concerns about froth/valuation and recent volatility pushed investors toward more diversified or large-cap-tilted exposure.

SIP inflows remain strong, with annualized contributions increasing 45% YoY this fiscal year. As of October, SIP assets represent 20% of industry AUM, and investor interest in long-term systematic investing continues to grow. SIP inflows are expected to play an even larger role as retail participation increases,” says Ankur Punj, MD – Business Head, Equirus Wealth.

In contrast, Dividend Yield funds (-₹178 crore) and ELSS (-₹665 crore) experienced outflows, with the former extending a brief streak of redemptions and the latter likely reflecting tax-seasonality and profit-taking after strong multi-month returns.

“Overall, most of the 11 equity sub-categories still recorded inflows, underscoring the durability of domestic participation,” said Srivastava.

New fund launches added modestly to overall industry activity, with 18 open-ended schemes mobilising ₹6,062 crore during the month.

Nehal Meshram, Senior Analyst, Morningstar Investment Research India, “Debt-oriented funds witnessed a sharp recovery in October 2025, registering net inflows of ₹1.60 lakh crore, following heavy redemptions of ₹1.02 lakh crore in September. The turnaround was driven mainly by robust inflows into liquid and overnight funds, as institutional investors redeployed surplus cash after the quarter-end outflows observed in the previous month.”

Liquid funds led the surge with inflows of ₹89,375 crore, reversing the September outflows of over ₹66,042 crore. Similarly, overnight funds attracted ₹24,051 crore, reflecting short-term treasury deployments as liquidity conditions eased post the tax outflows and quarter-end adjustments. Money market funds, too, rebounded strongly, garnering ₹17,916 crore, underscoring the return of institutional cash balances to short-term vehicles.

“Flows in the short-duration segment also rebounded strongly after last month’s heavy redemptions, as investors redeployed money across accrual-oriented categories amid comfortable liquidity and attractive yields. The recovery was led by ultra-short and low-duration funds, while corporate bond funds continued to show steady traction with inflows of ₹5,121 crore. In contrast, credit risk funds remained weak, highlighting investors’ continued caution toward lower-rated exposures,” Meshram.

Among the longer-duration categories, activity remained subdued but selective. Dynamic bond funds reported minor outflows of ₹232 crore after two months of positive traction, whereas medium to long duration funds saw a marginal inflow of ₹17 crore, indicating that investors are still cautious about making significant duration bets ahead of policy clarity.

Gilt funds remained weak, recording outflows of ₹931 crore, amid volatility in long-term yields and changing global rate expectations.

Meanwhile, Gold ETFs maintained steady investor interest in October 2025, with net inflows of ₹7,743 crore, after a record ₹8,363 crore in September. This ongoing momentum underscores investors’ continued preference for gold as a safe-haven and diversification tool amid geopolitical tensions, global market fluctuations, and uncertainties about the interest rate policies of major central banks.

“ With cumulative net inflows of ₹27,573 crore in 2025, Gold ETFs remain among the most resilient segments in the passive space, reaffirming their growing role in portfolio stability and risk mitigation,” said Meshram.