Equity mutual funds recorded net inflows of ₹28,054.06 crore in December, a 6.2 per cent decline from November, as investors booked profits amid volatile markets and shifted preference towards diversified categories.

Most equity sub-categories continued to see positive traction during the month, with the exception of dividend yield and ELSS (equity-linked saving schemes) funds. Flexi-cap funds — which allow fund managers the freedom to invest across large-cap, mid-cap and small-cap segments without a fixed allocation mandate — emerged as the biggest draw, logging net inflows of ₹10,019 crore compared with ₹8,135 crore in November.

“In 2024, sectoral and thematic funds had witnessed elevated inflows driven largely by return chasing, where allocations were not always aligned with investor risk profiles. This has led many investors to reassess their approach and move towards more balanced categories such as flexi-cap funds, which have attracted 23 per cent of year-to-date net inflows in equity,” said Suranjana Borthakur, head of distribution and strategic alliances, Mirae Asset Investment Managers (India).

“The strong inflows into flexi-cap funds, in particular, suggest investors are increasingly delegating asset allocation decisions to fund managers amid uncertain global cues,” added Kartik Jain, MD and CEO, Shriram AMC.

Debt-oriented schemes, meanwhile, witnessed net outflows of ₹1.32 lakh crore, largely driven by redemptions from liquid and money market funds. The combination of moderating equity inflows and debt fund redemptions resulted in a shrinkage of the industry’s overall asset base, with Assets Under Management (AUM) declining to ₹80.23 lakh crore in December from ₹80.80 lakh crore in November.

“The moderation in industry AUM was primarily driven by debt fund outflows for liquidity management and limited market-related value changes,” said Venkat N. Chalasani, chief executive of Amfi.

Retail participation through systematic investment plans (SIPs) rose to an all-time high of ₹31,000 crore in December, compared with ₹29,445 crore in November.

“The SIP data suggests that investors have used market corrections as opportunities to invest more. Total SIP contributions of ₹3.34 lakh crore in 2025 reflect long-term intent and confidence, rather than short-term speculation,” said Feroze Azeez, joint CEO, Anand Rathi Wealth.

Investors also exhibited renewed appetite for safe-haven assets, with gold exchange-traded funds (ETFs) registering net inflows of ₹11,647 crore in December, sharply higher than ₹3,742 crore in November and ₹7,743 crore in October.

“Gold has seen an exceptional year and the net inflows into gold ETFs has also gone up four times since last year. Gold is being viewed not only as a hedge but as a more strategic and long-term component of investor portfolios,” Borthakur added.