Equity MF Inflows Moderate as Gold ETFs Surge in December

Equity mutual fund inflows fell slightly to ₹28,054 crore in December 2025 from ₹29,911 crore in November 2025, as per AMFI data. The net outflows from the entire mutual fund industry were ₹66,571 crore as a result of significant redemptions from debt schemes.

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Debt Funds Drive Net Redemptions

The mutual fund industry had net redemptions of ₹1.32 lakh crore from debt mutual funds in December 2025, compared to the previous month. Only overnight and floating rate mutual funds had modest net inflows during December 2025. Despite the net redemptions from the debt mutual fund category, equity mutual funds had an AUM of ₹35.73 lakh crore compared to ₹18.10 lakh crore in the debt mutual fund category as of December 31, 2025.

Equity Category Dynamics

The flexi-cap mutual fund category led the way in net inflows, followed by the mid-cap and small-cap mutual fund categories. However, both the mid-cap and small-cap mutual fund categories declined from their respective November highs. The large-cap mutual fund category continued to have consistent participation. The ELSS scheme mutual fund category continued to experience net outflows due to ongoing tax-saving strategies. The SIP or Systematic Investment Plan contribution to all categories was at an all-time high in December 2025, which is indicative of retail investors' commitment to mutual funds, despite a moderation in lump-sum investing.

Gold ETFs Steal Spotlight

Gold Exchange-Traded Funds were the star performer this month, bringing in record net inflows of ₹11,647 crore, the highest monthly inflow seen in five months. This is a huge jump from November's net inflow of ₹3,742 crore and likely reflects investors using these funds as a safe-haven during volatile market conditions and geopolitical instability that typically occurs at year-end. Hybrid schemes saw substantial inflows of ₹10,756 crore and 'other schemes' an additional ₹26,723 crore in December.

Investor Behaviour Shift

The influx of capital into gold ETFs is a reflection of the high prices of gold. The price of gold increased by 64% over the last nine months, and the Reserve Bank of India also purchased gold as part of a long-term investment strategy.

Strategic Implications

The increase in the number of Systematic Investment Plans (SIPs) reaching record levels of ₹70 lakh crore will help cushion against the exit of Foreign Institutional Investors (FIIs), estimated to be ₹1.66 lakh crore by 2025. This increased SIP penetration in B-30 locations has now reached almost 20%. The dominance of flexi-cap funds also indicates a move away from passive to active management due to volatility on the Nifty.