December Dip: Mutual Fund Flows Amid Profit-Booking and Year-End Adjustments

Equity mutual funds saw a decline in inflows in December due to profit-booking. Overall, the mutual fund industry's AUM contracted slightly, with significant withdrawals from debt schemes. Retail participation via SIPs hit a record high, showing continued confidence in long-term growth, despite market volatility and selective investment approaches.

In December, equity mutual funds experienced a decline in inflows, attracting Rs 28,054 crore compared to the previous month, reflecting a drop of over 6% as investors capitalized on profit-booking opportunities.

The mutual fund industry's Assets Under Management (AUM) saw a marginal dip from Rs 80.80 lakh crore in November to Rs 80.23 lakh crore in December, primarily driven by steep redemptions from debt schemes. Despite volatile markets, equity funds continued to draw interest supported by consistent Systematic Investment Plan (SIP) contributions, which reached an all-time high of Rs 31,000 crore.

While equity inflows softened compared to Rs 29,911 crore in November, they remained robust against October's Rs 24,690 crore. Notably, mutual fund net outflows totaled Rs 66,591 crore in December, largely due to significant withdrawals from liquid, money market, and ultra-short duration debt funds linked to year-end treasury activities and corporate financial adjustments.