MUTUAL FUND FLOWS JUN-26 QUARTER – MACRO VIEW

MUTUAL FUND FLOWS JUN-26 QUARTER – MACRO VIEW

We will look at the macro picture of quarterly mutual fund flows on 3 fronts. Firstly, we look at the overall quarterly flows and AUM. Secondly, we look at the fund categories with best net inflows in Jun-26 quarter. Thirdly we look at the fund categories with biggest outflows.

Data Source: AMFI

Here are the key takeaways from the above flow data.

Gross flows into open ended funds in June 2026 quarter was flat at ₹42.41 Trillion while the redemptions were lower at ₹40.27 Trillion; resulting in net inflows of ₹2.14 Trillion.

For the Jun-26 quarter, positive net flows were dominated by short-end debt funds like liquid and arbitrage funds. Passive and active equity funds also got robust inflows.

The 5 biggest outflows were again in debt funds, but were split between short-end funds (Money Market, Low Duration) and long-end funds (Corporate Bond Funds, Gilt Funds).

A quick word on the closing net AUM. As of June 2026 quarter, net AUM of Indian mutual funds stood at ₹82.22 trillion; nearly 11.8% higher than the close of the March 2026 quarter. This was largely on account of the market recovery post April 2026.

DEBT FUND FLOWS IN JUNE 2026 QUARTER

Data Source: AMFI

The action in debt funds had a slight difference this time. The positive flows in the quarter had couple of short-end debt funds or debt proxies like liquid funds and arbitrage funds. Also, there was redemptions at the long end, with corporate bond funds and gilt funds seeing heavy redemptions in the June quarter on the back of inflation concerns.

Significant inflows were seen in several debt fund categories. Net inflows were prominent in Liquid Funds ₹93,130 crore, Overnight Funds ₹5,316 crore, Ultra Short Duration Funds ₹2,609 crore. Net outflows were prominent in the quarter in Low Duration Funds at ₹ (18,791) Crore, Money Market Funds ₹ (14,645) Crore, Corporate Bond Funds ₹ (8,371) Crore, and Short Duration Funds ₹ (5,857) Crore. Other outflows were fairly insignificant.

Total AUM of active debt funds at the close of June 2026 stood at ₹17.38 Trillion; compared to ₹16.52 Trillion, ₹18.10 Trillion, and ₹17.80 Trillion in the last 3 sequential quarters. Short-end debt flow recovered, but flows at longer-end were under stress due to rate hike fears.

EQUITY FUND FLOWS IN JUNE 2026 QUARTER

Data Source: AMFI

Net inflows into equity funds in the June 2026 quarter remained robust at ₹90,321 crore, at par with the March quarter. The inflows were, once again, dominated by two themes viz., allocation for diversification and alpha hunting in smaller stocks.

Flows into active equity funds were predominantly inflows in the Jun-26 quarter. Inflows were led by Flexi-Cap Funds at ₹20,555 Crore. This was followed by Small Cap funds at ₹17,433 Crore, Mid-Cap Funds ₹17,027 Crore, and Large & Mid-Cap funds ₹12,090 Crore. Thematic fund flows have fallen sharply.

Total AUM of equity funds as of June 2026 quarter surged to ₹37.34 Trillion; compared to ₹31.98 Trillion, ₹35.73 Trillion, and ₹33.68 Trillion in previous 3 sequential quarters. The sharp spike in the AUM in June 2026 quarter can be attributed to 11.8% market rally.

HYBRID FUND FLOWS IN JUNE 2026 QUARTER

Data Source: AMFI

Net flows in the quarter were dominated by Arbitrage Funds at ₹23,875 Crore, followed by Multi-Asset Allocation Funds (MAAF) at ₹13,853 Crore, Aggressive Hybrid Funds ₹4,265 Crore, and Dynamic Asset Allocation Funds (BAF) ₹2,508 Crore. After the massive sell-off in arbitrage funds in March quarter, funds returned in big numbers in the June quarter.

Total AUM of hybrid funds (including solution funds) as of June 2026 stood at ₹12.03 Trillion; compared to ₹10.88 Trillion, ₹11.59 Trillion, and ₹10.89 Trillion in the previous 3 sequential quarters. The bounce in AUM can again be attributed to the equity rally in the last quarter, after the situation had relatively stabilized in the Middle East.

PASSIVE FUND FLOWS IN JUNE 2026 QUARTER

Data Source: AMFI

All the four passive categories saw positive flows in the quarter, with equity index ETFs leading the way. Flows were back into gold and silver ETFs, which saw inflows of nearly ₹9,000 crore during the June 2026 quarter. Flows into Index Funds and global FOFs were also strong. After a fall in AUM in the March 2026 quarter, passive funds saw their AUM rebound to ₹15.31 Trillion as of the close of June quarter.

There are 3 key takeaways from the quarterly analysis of MF flows as of June 2026. Debt funds saw a subtle shift with strong inflows at the short end and outflows at the long end due to inflation triggering fears off RBI hawkishness. Secondly, equity fund flows were stable, thanks to SIPs. The sectoral theme is out of favour and the preference is for cap-based allocations and alpha hunting. Lastly, passive funds are back in reckoning, with investor interest returning to ETFs on precious metals. That is the good news!