March 2026 MF flow intensity veers sharply on Negative side

March 2026 MF flow intensity veers sharply on Negative side

MUTUAL FUND FLOWS MARCH 2026 – RAPID FIRE

In March 2026, open-ended mutual funds saw net outflows of ₹(2,40,052) Crore across categories. Here is a quick look at the key flow narratives.

Debt funds saw net outflows of ₹(2,94,987) Crore dominated by outflows at the short end of the curve; specifically overnight funds, liquid funds and short duration funds.

Equity Fund inflows picked up to ₹40,450 Crore. Flows were led by Flexi Cap Funds, Small Cap Funds, Mid-Cap Funds, and Large & Mid-Cap Funds.

Hybrid funds saw net inflows of ₹(16,282) Crore, largely due to arbitrage fund redemptions. Passive funds saw inflows surge to ₹30,768 Crore for March 2026, as flows into equity index ETFs and index funds offset tepid flows into gold ETFs.

The NFOs tapered in March 2026 at ₹3,743 Crore, while gross SIP flows in March 2026 touched an all-time record of ₹32,087 Crore, including some Feb lag flows.

Let us turn to flow significance as a share of net AUM.

MF FLOW SIGNIFICANCE ON NET AUM SIZE – MACRO PICTURE

When it comes to mutual fund flows; two things matter. The size of the flows and whether the swing flows were on the positive or negative side? Here is a quick macro picture.

Data Source: AMFI (# - Only open-ended funds)

Debt fund flows clearly swung on the negative side, while equity and passive funds veered on the positive side. Hybrid funds were in the negative, but it was deeply influenced by the redemptions in arbitrage funds. In terms of flow dominance, the month belonged to passive funds, equity funds, hybrid funds, and debt funds in that order.

ACTIVE DEBT FUNDS: FLOW DOMINANCE ON THE NEGATIVE SIDE

In the case of debt funds in March 2026, all the 16 fund categories witnessed net outflows. While outflows from short-end funds were explained by advance tax related redemptions, selling at the long-end was more due to interest rate hike concerns.

Data Source: AMFI

As can be seen in the above table, the most significant flows as share of AUM were broadly on the negative side (Overnight funds, Liquid funds, Short Duration funds, Low duration funds, and Ultra-Short Duration Funds). This is part of a quarterly cycle, wherein corporates redeem short-end funds to pay for advance taxes.

ACTIVE EQUITY FUNDS: ALPHA PLUS ALLOCATION THE BIG PICTURE

In the case of equity funds in March 2026, out of the 11 fund categories, 9 categories saw net inflows while ELSS and Dividend Yield Funds saw outflows. In terms of the 5 most significant flow categories, all were in the positive.

Data Source: AMFI

If you look at the 5 categories of equity funds with the most significant flow to AUM ratio, all are on the positive side. However, 2 themes emerge from the analysis. Flexi cap funds, large & mid-cap funds, and multi-cap funds are based on the theme of allocation and diversification. On the other hand; Small Cap Funds and Focused funds are about generating alpha by taking risk of portfolio concentration. While the interest in thematic funds has reduced, investors are veering more towards capitalization-based options.

HYBRID ALLOCATION FUNDS: ARBITRAGE FUNDS SPOIL THE SHOW

In the case of hybrid funds in March 2026; out of the 8 hybrid categories, 4 saw positive flows and 4 funds saw net outflows. The 5 most significant flow categories had 2 in the positive and 3 in the negative.

Data Source: AMFI

If you look at the five categories of equity funds with the most significant flow to AUM ratio, the broad theme is about redemptions in arbitrage funds, which is more akin to short-term debt funds. However, even allocation funds like equity savings and BAFs saw net outflows. The lure of multiple asset classes continued to keep MAAFs on the radar of investors.

PASSIVE FUNDS: ARE EQUITY INDICES THE NEW GOLD?

In the case of passive funds in March 2026, all the 4 fund categories again saw net inflows. In terms of the most significant flow categories, here is the list.

Data Source: AMFI

If you look at the top categories in terms of significance of flow / AUM ratio, gold funds have fallen to the bottom position due to the sharp fall in gold prices. Despite their substantial AUM, equity index funds and equity index ETFs are back to dominating the flow/aum ratio.

The overall picture in March may have been skewed by the redemptions in short-end debt and arbitrage funds. April should offer a clearer picture of flow intensity.