Inflow in equity mutual funds dipped 3.24 per cent to Rs 24,269 crore in April as concerns over potential US tariffs and a shift in investor preference toward debt and hybrid strategies weighed on sentiment.

This was the fourth consecutive month of decline in inflow in equity funds amid continued market volatility against the backdrop of escalating tensions between India and Pakistan following the Pahalgam terrorist attack.

Also, the latest fund infusion by investors marks the 50th consecutive month of net inflows into the segment.

Despite the decline, Systematic Investment Plan (SIP) contributions remained robust, registering a record Rs 26,632 crore in inflows in April, higher than Rs 25,926 crore in the preceding month, data released by Association of Mutual Funds in India (Amfi) on Friday showed.

"The steady increase in SIP contribution was driven by a steady increase in the number of contributing accounts, which now total 8.38 crore. This continued growth reflects the rising preference among investors for mutual funds as a disciplined and effective tool for long-term savings," Venkat Chalasani, Chief Executive at Amfi said.

Apart from equity, debt funds registered an inflow of Rs 2.19 lakh crore in the month under review after seeing a withdrawal of Rs 2.02 lakh crore in March. Overall, the mutual fund industry experienced an infusion of Rs 2.77 lakh crore in April after the typical quarter-end outflows of Rs 1.64 lakh crore in the preceding month.

The inflow has lifted the industry's assets under management to a record Rs 70 lakh crore as of April from Rs 65.74 lakh crore at March-end.

According to the data, equity-oriented mutual funds saw an inflow of Rs 24,269 crore in April, lower than Rs 25,082 crore in March. In February, such funds witnessed an inflow of Rs 29,303 crore, Rs 39,688 crore in January and Rs 41,156 crore in December.

The decline in inflow is due to concerns over potential US tariffs and a shift in investor preference toward debt and hybrid strategies, Ankur Punj MD of Equirus Wealth said.

Himanshu Srivastava – Associate Director- Manager Research, Morningstar Investment Research India, said despite the decline, the quantum of flows remains significant, especially against the backdrop of a challenging global landscape and escalating geopolitical tensions between India and Pakistan following the Pahalgam terrorist attack on April 22.

Within the equity fund categories, Flexi Cap Funds recorded the highest inflows in April, attracting Rs 5,542 crore. However, equity linked saving schemes saw an outflow of Rs 372 crore.

In April, mid-cap and small-cap mutual funds continued to attract investor interest, with inflows of Rs 3,314 crore and Rs 4,000 crore, respectively. Large-cap funds received Rs 2,671 crore as compared to Rs 2,479 crore in March.

Equirus Wealth's Punj said that short-term volatility in equity markets is likely but constructive on India’s structural long-term growth story, which continues to demonstrate resilience amid global uncertainties.

Additionally, hybrid funds saw recovery in April attracting Rs 14,247 crore after an outflow of Rs 946 crore in the preceding month.

On the debt front, the rebound was broad-based, with 12 out of 16 debt mutual fund categories reporting net inflows.

"The surge in April inflows also reflects a return to normalcy and reaffirmed confidence in fixed income instruments, particularly among corporates redeploying idle cash following year-end disbursements," Nehal Meshram, Senior Analyst – Manager Research, Morningstar Investment Research India, said.

Liquid funds witnessed highest net inflows of Rs 1.18 lakh crore, reversing more than 89 per cent of its March outflows. Similarly, overnight funds and money market funds attracted Rs 23,900 crore and Rs 31,507 crore respectively, as short-term instruments regained favour amid stable monetary conditions and strong liquidity.

The significant inflows also extended to ultra short and low duration funds, which garnered Rs 26,734 crore and Rs 9,371 crore respectively, signalling renewed interest in slightly longer short-term strategies offering better risk-adjusted returns.

However, Gold exchange traded funds (ETFs) witnessed a net outflow of nearly Rs 6 crore in April on profit booking. This was significantly better than March when the category witnessed a net outflow of over Rs 77 crore.

Except for the headline, this story has not been edited by The Telegraph Online staff and has been published from a syndicated feed.