Equity mutual funds: Inflows dip 25% MoM in August; NFO activity sees sharp drop

Equity mutual fund inflows, including hybrid schemes but excluding arbitrage, in August this year fell to Rs 424 billion, marking a 25% month-on-month and 8% annual decline, as per a JM Financial report.

The fall was driven largely by a thinning new fund offering (NFO) pipeline, which accounted for 61% of the Rs 142 billion MoM drop in net inflows. Equity and hybrid NFO inflows were only Rs 22 billion in August, down sharply from RS 109 billion in July, news agency ANI reported, citing the data.

Notable launches during the month included the Kotak Active Momentum Fund, Bank of India Mid Cap Fund, Bajaj Finserv Equity Savings Fund and the 360 ONE Multi Asset Allocation Fund. Despite the weakness in NFO activity, systematic investment plan (SIP) inflows remained resilient at Rs 282.7 billion, slightly down by 0.7% MoM but up 20% YoY.

Arbitrage funds remained in demand, pulling in Rs 67 billion of inflows, though a shade lower than June’s Rs 73 billion. Total gross sales moderated to Rs 773 billion compared with Rs 977 billion in July, while redemptions declined to Rs 350 billion, the lowest level yet in FY26.

By segment, thematic funds suffered the steepest MoM fall in inflows, dropping to RS 39 billion from RS 94 billion after a prior month NFO surge. Small-cap funds also saw inflows fall by RS 15 billion, largely reflecting the high base set by the Bajaj Finserv NFO in July, as per JM Financial data reported by ANI.

Equity assets under management (including arbitrage) were broadly unchanged at Rs 43.8 trillion, where a 1.5% negative market impact was largely offset by a 1.1% gain from net inflows.

On the fixed income side, mutual funds recorded outflows of Rs 18 billion, while liquid funds reversed course with Rs 62 billion of outflows following a strong July.

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