Investor appetite for passive funds appears to have moderated in April after strong traction in the previous month, while active funds continued to attract steady interest.
Net inflows into index funds fell 43% month-on-month to ₹4,625 crore in April, while inflows into other exchange-traded funds (ETFs) declined 45% sequentially to ₹10,754 crore, as per data from Association of Mutual Funds of India (Amfi).
On the contrary, inflows into active equity funds dipped much lower as compared to that of passive funds. Net inflows into equity mutual funds fell 5% month-on-month (MoM) to ₹38,440 crore in April.
Investors may have taken a back-seat from passive funds after the sharp move in the index in March on the back of the West Asia war. In March, the Nifty 50 index fell 11.31%.
Passive funds replicate an entire index while active funds take calls on which stocks to buy.
“ETFs witnessed weaker inflows, which could indicate that some investors who were earlier investing through passive routes, may have shifted back to active funds amid volatile market conditions,” said Jimmy Patel, managing director at Quantum Asset Management.
Total equity inflows of ₹38,440 crore are 33% above the FY2025-26 monthly average—a powerful signal that retail participation is structural, not cyclical, said Viraj Gandhi, chief executive officer of Samco Mutual Fund.
How have other equity funds fared?
Small-cap, mid-cap, multi-cap and flexi-cap schemes saw an increase in inflows while inflows in all other categories declined.
In percentage terms, inflows into focused funds tumbled the most by 51% MoM to ₹1,194.80 crore. In the value fund/contra fund category, inflows declined 31% to ₹1,478.08 crore, and in the thematic and sectoral funds, the contributions were lower by 28% to ₹1,949.36 crore.
The flexi-cap fund, meanwhile, continued to see strong inflows of ₹10,147.85 crore, an increase over ₹10,054.12 crore recorded last month. Meanwhile, the small-cap category saw a 10% increase and the mid-cap category an 8% rise to record highs of ₹6,885.90 crore and ₹6,551.40 crore, respectively.
Navneet Munot, MD and CEO of HDFC Asset Management Company said, “Against the backdrop of a challenging global environment, Indian mutual fund investors have shown commendable resilience.”
“Equity flows have held up well, reflecting the growing maturity of our investor base and the deepening awareness about the merits of systematic investing. While markets will always have to contend with geopolitical developments, the data suggests that long-term financial goals are increasingly guiding investment decisions over short-term noise,” Munot added.
