Index Funds Record ₹3,614 Crore Outflows in September as Overseas Mutual Funds See Further Withdrawals

Key Takeaways

• Index mutual funds recorded net outflows of ₹3,614.03 crore in September, reversing inflows of ₹787.49 crore in August. 
• Overseas-investing mutual funds experienced net withdrawals of ₹159.18 crore, compared with ₹72.19 crore in the previous month. 
• Equity exchange-traded funds separately recorded inflows of approximately ₹9,959.96 crore, highlighting contrasting trends across passive investment categories. 

Index Fund Flows Reverse in September 

Index mutual funds recorded net outflows of ₹3,614.03 crore in September 2026, reversing the positive subscriptions reported during August. 

AMFI's monthly data showed that index fund schemes had attracted net inflows of ₹787.49 crore in the preceding month. 

The latest figures therefore represent a month-on-month flow reversal of approximately ₹4,401.52 crore. 

Index mutual funds generally seek to replicate the performance of a specified benchmark by investing in securities that constitute the underlying index. 

Their returns are influenced by movements in that benchmark, portfolio expenses and tracking difference. 

The September outflow figure measures net withdrawals from the category and does not represent the percentage change in the value of the underlying indices. 

Overseas Funds Record Another Month of Withdrawals 

Mutual funds investing in overseas securities also experienced negative net flows. 

The category recorded withdrawals of ₹159.18 crore during September, compared with ₹72.19 crore in August. 

Net outflows therefore increased by approximately ₹86.99 crore month-on-month. 

International mutual fund schemes provide exposure to overseas markets, either through direct investments or through permitted fund-of-funds structures. 

Access to overseas investments can be affected by applicable regulatory limits, scheme-level restrictions and the availability of investment capacity. 

However, the September flow data alone does not establish whether the redemptions were caused by investment restrictions, market movements or changes in investor allocations. 

The figures confirm that net withdrawals continued during the month.

Equity ETFs Show a Different Flow Pattern 

While index funds recorded outflows, equity ETFs attracted approximately ₹9,959.96 crore in net subscriptions during September. 

Gold ETFs also recorded inflows of ₹4,450.61 crore, while silver ETFs attracted ₹1,974.32 crore. 

This contrast demonstrates that passive investment products did not experience a uniform flow trend. 

Although both index mutual funds and equity ETFs typically seek to track market benchmarks, their transaction structures differ. 

Index mutual fund transactions generally take place directly through the fund at the applicable net asset value, while ETF units are typically bought and sold on stock exchanges at market prices. 

Different investment channels, institutional activity and portfolio requirements may contribute to variations in fund-flow patterns. 

September Data Highlights Differences Within Passive Investing 

The mutual fund industry recorded overall net outflows of approximately ₹1.33 lakh crore during September, largely reflecting withdrawals from debt-oriented schemes. 

Equity mutual funds nevertheless attracted ₹38,306.55 crore in net inflows, and systematic investment plan contributions reached a record ₹32,490 crore. 

Within passive products, ETF inflows and index fund withdrawals occurred simultaneously. 

The figures underline the importance of assessing individual categories rather than treating all passive investment products as a single segment. 

September's numbers establish changes in subscriptions and redemptions. They do not show that ETFs performed better than index mutual funds or that overseas schemes generated lower returns.