The August inflow was ₹4,630 crore higher than the previous month, translating into an 18.8% month-on-month increase.
Within equity-oriented categories, large-cap funds recorded an outflow for the second consecutive month. Meanwhile, small-cap fund inflows were at their highest level in at least two years, while mid-cap fund inflows reached a level that was at least a one-year high.
Sandeep Bagla, CEO of TRUST Mutual Fund, attributed the relatively weak large-cap flows to the lack of excitement around the large-cap index, which has significant exposure to sectors such as BFSI, IT and FMCG.
According to Bagla, performance and flows in these funds have remained lacklustre amid valuations and slower growth in these areas.
“Excitement has shifted to small and mid-caps and that inflows are increasing,” Bagla said.
He said the trend was also linked to earnings growth, with more earnings upgrades taking place in mid- and small-cap companies compared with large-caps. He added that the incremental growth in earnings is increasingly coming from mid- and small-caps, which is reflected in the flow trends.
Bagla expects the trend of stronger flows into mid- and small-cap funds to continue for at least another six months.
Himanshu Srivastava, Principal, Manager Research, Morningstar Investment Research India, said the continued flows into mid- and small-cap funds came alongside relative strength in the broader market during August. However, he cautioned that investors should remain mindful of the higher volatility associated with these segments, particularly given elevated valuations in parts of the market.
Large-cap funds recorded a ₹1,147 crore net outflow in August, although this was lower than the ₹1,322 crore outflow in July. Large & mid-cap funds, meanwhile, attracted ₹3,873 crore, while multi-cap funds received ₹3,733 crore.
SIP contributions rose to an all-time high of ₹32,297 crore in August, compared with ₹31,115 crore in July, an increase of 3.8% month-on-month.
Gaurav Goyal, Chief Business Officer at Canara Robeco Asset Management Company, said the combination of record SIP contributions and strong equity inflows indicated that investors were increasingly staying invested through market cycles and focusing on long-term wealth creation.
Aakanksha Shukla, AVP, Wealth Management at Master Capital Services, said that SIPs staying strong proves that people didn’t panic during the recent volatility. What stands out is where that conviction is going: small caps got the highest inflows, more than mid-cap or flexi-cap which means investors see the recent fall as a buying opportunity, not a red flag.
The industry recorded 66.39 lakh new SIP registrations during August, while 53.82 lakh SIP accounts were discontinued during the month.
Sectoral and thematic funds together received ₹1,713 crore during August, including ₹592 crore through new fund offers (NFOs). Morningstar’s Srivastava said flows into these categories, excluding NFO collections, have moderated in recent months, indicating greater caution towards concentrated sector- and theme-specific allocations.
ETFs saw total inflows of ₹10,161 crore in August. Of this, equity ETFs accounted for ₹7,237 crore, while gold ETFs received ₹2,597 crore and silver ETFs saw inflows of ₹1,271 crore.
Specialised Investment Funds (SIFs) recorded ₹7,699 crore of inflows during August, according to AMFI data.
Overall, Srivastava said the August numbers pointed to continued domestic investor participation despite subdued headline equity markets. He added that geopolitical risks, crude-oil volatility and uncertainty around global interest rates could keep markets volatile, making disciplined and diversified allocation important for investors.
