Mumbai: Market volatility notwithstanding, equity mutual funds continue to maintain its sheen with retail investors steadily investing in these schemes with an aim towards long-term wealth creation.
The net AUM (Asset under Management) of equity mutual funds surged by 335.31 per cent at Rs 33.32 lakh crore in July 2025, up from Rs 7.65 lakh crore in July 2020.
SIPs have become a popular tool for managing volatility, allowing investors to invest a fixed amount regularly, benefiting from rupee cost averaging i.e. buying more units when prices are low and fewer when prices are high, ICRA Analytics said.
Inflows into equity mutual funds have witnessed a steady rise growing from an outflow of (Rs 3,845 crore) in July 2020 to an inflow of Rs 42,673 crore in July 2025. On a year-on-year basis, inflows have increased by 15.08 per cent from Rs 37,082 crore in July 2024, while month-on-month, it has gone up by nearly 81.06 per cent as compared with Rs 23,568 crore in June 2025.
Commenting on the AMFI data for the month of July 2025, Ashwini Kumar, Senior Vice President and Head Market Data, ICRA Analytics, said, “Inflows into equity mutual funds has witnessed a sharp rise in the last few years as investors are increasingly adopting a long-term perspective, recognizing that short-term market fluctuations are part of the journey toward wealth creation. Historical data shows that markets tend to recover and reward patient investors over time. Sectoral/thematic funds drew the highest inflows at Rs 9,426.03 crore as investors, particularly in the retail segment, continue to seek new growth opportunities and explore avenues to generate alpha or higher returns. This was followed by flexi cap funds and small cap funds which attracted inflows to the tune of Rs 7,654.33 crore and Rs 6,484.43 crore respectively as investors prefer diversified allocation and higher returns.”
Despite global uncertainties, domestic investors remain optimistic about India’s economy, driving steady equity mutual fund inflows even in volatile markets, Kumar said. Equity MFs continue to outperform traditional options like fixed deposits, offering positive three-year returns, especially appealing to young investors. Systematic Investment Plans (SIPs) have gained traction as they help manage volatility through disciplined, regular investments and rupee cost averaging.
While large inflows or redemptions can heighten market swings, growing SIP adoption and rising financial awareness have kept retail investors invested, ensuring resilience and sustained inflows despite market turbulence.