ACTIVE EQUITY FUNDS – MACRO STORY OF FY25
Over the last few years, active equity funds have triggered the growth and asset proliferation in the mutual fund segment. In FY25, there was also the big bets that retail investors were making on active equity funds; both as a strategic wealth creation tool and also as a financial planning tool. For the fiscal year FY25, total net inflows into equity funds were to the tune of ͅ₹4,17,053 Crore. While SIPs did play a role in these inflows, the year FY25 also saw the rise of lumpsum investing as people tried to time a volatile market. If you look at the 11 fund categories across 12 months, then you have 132 data flow points. Out of these 11 categories of equity funds; focused funds and ELSS funds saw negative net flows in all the months of the first half of FY25. The other 9 categories of funds saw positive net flows in all the 12 months of FY25.
WHAT DO MONTHLY EQUITY FLOWS TELL US?
The table below captures the monthly net flows into active equity funds in FY25, classified into various categories of equity funds. Here is a quick dekko.
| Equity Fund Categories | Apr-24 | May-24 | Jun-24 | Jul-24 | Aug-24 | Sep-24 | Oct-24 | Nov-24 | Dec-24 | Jan-25 | Feb-25 | Mar-25 |
| Multi-Cap Fund | 2,724 | 2,645 | 4,709 | 7,085 | 2,475 | 3,509 | 3,597 | 3,626 | 3,075 | 3,567 | 2,518 | 2,753 |
| Large Cap Fund | 358 | 663 | 970 | 670 | 2,637 | 1,769 | 3,452 | 2,548 | 2,011 | 3,063 | 2,866 | 2,479 |
| Large & Mid Cap Fund | 2,639 | 2,397 | 2,912 | 2,622 | 3,294 | 3,598 | 4,857 | 4,680 | 3,812 | 4,123 | 2,656 | 2,718 |
| Midcap Fund | 1,793 | 2,606 | 2,528 | 1,644 | 3,055 | 3,130 | 4,683 | 4,883 | 5,093 | 5,148 | 3,407 | 3,439 |
| Small Cap Fund | 2,209 | 2,725 | 2,263 | 2,109 | 3,209 | 3,071 | 3,772 | 4,112 | 4,668 | 5,721 | 3,722 | 4,092 |
| Dividend Fund | 341 | 445 | 520 | 631 | 500 | 1,530 | 533 | 216 | 277 | 215 | 69 | 141 |
| Contra Fund | 1,987 | 1,404 | 2,027 | 2,171 | 1,728 | 1,964 | 2,457 | 2,088 | 1,514 | 1,556 | 1,347 | 1,553 |
| Focused Fund | -328 | -307 | -287 | -620 | -84 | -273 | 693 | 430 | 456 | 783 | 1,288 | 1,386 |
| Sector / Thematic Fund | 5,166 | 19,213 | 22,352 | 18,386 | 18,117 | 13,255 | 12,279 | 7,658 | 15,332 | 9,017 | 5,712 | 170 |
| ELSS | -144 | -250 | -445 | -638 | -205 | -349 | 383 | 619 | 188 | 797 | 615 | 735 |
| Flexi Cap Fund | 2,173 | 3,155 | 3,059 | 3,053 | 3,513 | 3,215 | 5,181 | 5,084 | 4,731 | 5,698 | 5,104 | 5,615 |
| Monthly Totals | 18,917 | 34,697 | 40,608 | 37,113 | 38,239 | 34,419 | 41,887 | 35,943 | 41,156 | 39,688 | 29,303 | 25,082 |
Data Source: AMFI
Total net inflows into active equity funds in FY25 stood at ͅ₹4,17,053 Crore. This is the highest ever net flows into equity funds. In 3 out of 12 months, the net inflows into equity funds exceeded the ₹40,000 Crore mark. A total of 9 out of 12 months saw net inflows into equity funds of more than ₹30,000 crore. The average monthly flow into equity funds was to the tune of ₹34,754 Crore. Let us look at the thematic shifts in active equity fund flows.
WHICH EQUITY FUND CATEGORIES DOMINATED FLOWS IN FY25?
Once again, the above table tells a rather eloquent story about which categories dominated equity fund flows. The sectoral and thematic funds alone accounted for 35.2% of total net flows into equity funds in FY25. This was largely driven by NFOs and an appetite for higher risk in search of alpha. If you combine the multi-cap and flexi-cap funds, they jointly accounted for 22.0% of the total flows. The three non-frontline fund categories viz. (large & mid-cap funds, mid-cap funds, and small cap funds) jointly accounted for 29.6% of the total flows into equity funds.
Broadly, there were 3 stories that investors chased in active equity funds in FY25. The first was the high risk sectoral / thematic funds in search of alpha. The second was moving down the capitalization curve in search of alpha through mid-cap funds, small cap funds etc. Finally, there were the allocation funds that spread the corpus across large caps, mid-caps, and small caps to combine stability with alpha. These 3 themes jointly accounted for 86.8% of all active equity fund flows in financial year FY25.
