Mutual Fund Inflows Dip in December as Investors Turn Cautious

In December, equity mutual fund inflows dropped to ₹16,997 crore, marking a 14% decline from November’s ₹19,957 crore. This slowdown was mainly due to reduced investments in large-cap, mid-cap, and small-cap funds. These categories, which had seen strong inflows earlier, witnessed a sharp fall as investors grew cautious amid high market valuations and global uncertainties.

Large-cap funds saw inflows shrink to ₹349 crore from ₹1,562 crore in November. Mid-cap funds dropped to ₹874 crore from ₹2,665 crore, while small-cap funds fell to ₹1,170 crore from ₹2,666 crore. Experts believe investors are booking profits and shifting to safer options like large-cap or multi-cap funds, or even hybrid funds, to manage risk better.

Despite the dip, the overall equity mutual fund segment still saw positive inflows for the 34th consecutive month. Sectoral and thematic funds, however, remained popular, attracting ₹5,108 crore, driven by interest in themes like infrastructure and manufacturing.

SIP contributions hit a record ₹17,610 crore in December, showing that retail investors continue to trust systematic investing. While the market remains volatile, experts suggest that investors should focus on long-term goals and maintain a diversified portfolio to ride out short-term fluctuations. Staying disciplined and avoiding panic is key in such times.