Equity Mutual Fund Inflows Jump 15% in July, Sectoral and Flexi Cap Funds Drive Momentum

Equity mutual funds attracted fresh investments of ₹42,700 crore in July 2025, marking a 15% rise from a year earlier, according to data from ICRA Analytics. The figures underline how investors are continuing to channel savings into equities despite global uncertainty, with certain fund categories emerging as clear favourites.

Sharp Growth on Annual and Monthly Basis

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In July last year, inflows were recorded at ₹37,100 crore. The year-on-year increase of ₹5,600 crore reflects the steady appetite for equities. Even more striking is the 81% month-on-month rise compared with June 2025, signalling a quick rebound in investor confidence after recent market volatility. Analysts suggest that the strong July inflows point to optimism about long-term returns, even if short-term conditions remain uneven.

Sectoral and Flexi Cap Funds in Demand

Within categories, sectoral and thematic funds accounted for the largest inflows at ₹9,250 crore. Flexi cap funds followed with ₹7,650 crore, while small cap funds drew ₹6,500 crore. The distribution highlights a blend of strategies — investors are both seeking specialised exposure through sectoral themes and choosing flexible schemes that allow fund managers to shift allocations across market segments. Small caps, despite their volatility, remain attractive for those chasing higher growth.

Long-Term Performance Underpins Confidence

Much of this sustained interest is tied to the track record of equity funds. Over three to five years, most categories have delivered compound annual growth of over 15%. Small-cap funds stand out with a five-year CAGR of 31.7%, while even large and mid-cap funds produced returns above 23%. Short-term corrections have pulled down one-year figures in some cases, but investors appear focused on the stronger longer-term numbers.

Expanding AUM Reflects Structural Shift

The broader industry trend is equally notable. Equity assets under management have surged 335% in just five years, climbing from ₹7.65 lakh crore to ₹33.32 lakh crore. This remarkable growth underscores the rise of retail participation and the gradual shift of household finances towards systematic, long-term investment through mutual funds.

Conclusion

July’s numbers reaffirm the strong role of equity mutual funds in Indian portfolios. With sectoral and flexi cap funds attracting the bulk of new money and long-term performance continuing to impress, the industry is set on a path of deeper penetration and stronger investor engagement.