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Mutual Fund AUM Growth in January 2025: Strong Inflows, But Price Depletion Takes a Toll

Nishita Masih by Nishita Masih
4 months ago
Reading Time: 4 mins read
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The first month of 2025 saw India’s mutual fund industry experience an intriguing shift in assets under management (AUM). While the overall AUM of open-ended funds rose from ₹66.66 trillion in December 2024 to ₹66.99 trillion in January 2025, the net addition of ₹32,509 crore was far from the whole story. A staggering ₹1,87,606 crore flowed into these funds, but the market downturn erased ₹1,55,097 crore in value. The impact was particularly severe for equity funds, while debt funds held their ground.

Debt Funds Lead the Way, Despite Market Volatility

January 2025 turned out to be a strong month for debt mutual funds. Unlike their equity counterparts, they managed to absorb inflows and even saw a price appreciation.

  • The segment added a total of ₹1,38,838 crore to its AUM, with ₹1,28,653 crore coming from net inflows and ₹10,185 crore from price movement.
  • Short-term categories such as money market funds, liquid funds, and overnight funds saw the least impact from price fluctuations.
  • Long-duration funds, such as gilt and dynamic bond funds, benefited from expectations of an RBI rate cut, adding to their price appreciation.

A closer look at key debt categories:

CategoryNet Inflow (₹ Cr)AUM Closing (₹ Cr)AUM Accretion (₹ Cr)Price Accretion (₹ Cr)
Money Market Fund21,915.532,53,709.4623,398.491,482.96
Liquid Fund91,592.925,59,392.7094,721.173,128.25
Dynamic Bond Fund-114.9735,388.06111.17226.14
Gilt Fund with 10-Y duration-22.774,850.6218.5641.33

Debt funds stood resilient despite a mixed market environment. The minimal impact on price for short-term funds reinforced their stability, while long-duration funds thrived on interest rate expectations.

Mutual Fund Market Data January 2025

Equity Funds Hit Hard by Market Downturn

Equity mutual funds attracted solid inflows, but a deep market correction wiped out much of the gains.

  • Total net inflows into equity funds stood at ₹39,688 crore.
  • However, price depletion across categories resulted in an overall AUM decline of ₹1,10,784 crore.
  • The biggest hits came from thematic funds, large-cap funds, and flexi-cap funds.

The steepest declines were seen in:

CategoryNet Inflow (₹ Cr)AUM Closing (₹ Cr)AUM Accretion (₹ Cr)Price Accretion (₹ Cr)
Small Cap Fund5,720.873,05,580.17-23,665.14-29,386.01
Mid Cap Fund5,147.873,73,184.22-26,599.95-31,747.82
Sectoral/Thematic9,016.604,60,920.60-11,777.48-20,794.07

The correction was broad-based, with nearly every equity category taking a hit. Small-cap and mid-cap funds suffered the worst drawdowns, indicating a sector-wide loss of investor confidence.

Hybrid Funds: Inflows Cushion the Blow

Hybrid funds saw a mixed performance in January 2025. While the category attracted ₹9,011 crore in fresh investments, the price impact resulted in an overall AUM depletion of ₹2,811 crore.

  • Arbitrage funds were the standout performer, adding ₹4,241 crore in AUM despite market volatility.
  • Balanced Advantage Funds (BAFs) and Children’s Funds, with higher equity allocations, suffered the most.
  • Conservative hybrid funds faced limited price impact due to their debt-heavy structure.

Key hybrid fund movements:

  • Arbitrage Fund: ₹4,241 crore in AUM accretion, price depletion negligible.
  • Balanced Hybrid Fund: ₹3,184 crore depletion due to market downturn.
  • Dynamic Asset Allocation (BAFs): ₹4,270 crore price depletion due to equity exposure.

The overall decline was relatively small compared to equity funds, showcasing hybrid funds’ ability to balance risk in tough market conditions.

Passive Funds Show Strength, Gold ETFs Shine

The passive fund segment experienced strong inflows, with index funds and Gold ETFs standing out.

  • Total net inflows reached ₹10,255 crore, with AUM accretion at ₹7,267 crore.
  • Gold ETFs added ₹7,244 crore, benefiting from a global flight to safety.
  • Index funds, however, struggled with price depletion of ₹4,211 crore.

Top passive fund trends:

CategoryNet Inflow (₹ Cr)AUM Closing (₹ Cr)AUM Accretion (₹ Cr)Price Accretion (₹ Cr)
Gold ETF3,751.4251,839.397,243.793,492.37
Index Funds5,254.662,76,120.481,043.28-4,211.37
International FOF77.5328,065.071,452.291,374.76

Gold ETFs continued their upward trajectory, fueled by global uncertainty and inflation hedging. Index funds, on the other hand, bore the brunt of equity market turmoil.

The Takeaway

January 2025 was a classic case of strong investor confidence clashing with market headwinds. Debt funds benefited from inflows and price gains, while equity funds bore the brunt of the correction. Hybrid and passive funds navigated a middle path, with gold ETFs emerging as a safe haven.

With RBI’s monetary policy in focus and global market trends dictating equity moves, February’s AUM figures will be closely watched. If the rate-cut expectations materialize, debt funds could continue their upward trend. Meanwhile, equity investors will be hoping for stability before committing fresh capital.

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Nishita Masih

Nishita Masih

Nishita Maish is a senior content manager, blending creativity with strategic insight to craft compelling narratives that captivate audiences. With a passion for storytelling and a knack for digital engagement, she has elevated brands and content strategies to deliver lasting impact in the ever-evolving digital world.

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