Debt mutual funds: Rs 1.02 lakh crore outflows in September; liquid & money market funds hit hardest – The Times of India

Fixed-income mutual funds in India witnessed a massive net outflow of Rs 1.02 lakh crore in September 2025, a sharp rise from modest redemptions of Rs 7,980 crore in August, according to data from the Association of Mutual Funds in India (Amfi). The surge was primarily driven by large institutional withdrawals from liquid and money market funds.Out of 16 debt categories, 12 recorded net outflows during the month. Liquid funds saw the steepest outflow at Rs 66,042 crore, followed by money market funds with Rs 17,900 crore, and ultra-short duration funds with Rs 13,606 crore. Low-duration funds also recorded redemptions of Rs 1,253 crore. Short-duration funds faced a relatively modest outflow of Rs 2,173 crore, suggesting that some investors remained anchored to shorter-tenor accrual-oriented products.As per news agency PTI, senior analyst Nehal Meshram from Morningstar Investment Research India explained, “The higher outflow in September was primarily led by large institutional withdrawals from liquid and money market funds, reflecting quarter-end liquidity adjustments and advance tax-related outflows. These categories often used by corporates and institutions for short-term cash management remain highly sensitive to seasonal liquidity cycles.”The large redemptions pulled down the assets under management (AUM) of debt funds by nearly 5 per cent to Rs 17.8 lakh crore at the end of September from Rs 18.71 lakh crore in the preceding month.On the inflow side, overnight funds registered Rs 4,279 crore, dynamic bond funds Rs 519 crore, medium to long-duration funds Rs 103 crore, and long-duration funds Rs 61 crore.Equity mutual funds, in contrast, saw inflows of Rs 30,421 crore in September, a 9 per cent decline from Rs 33,430 crore in August and well below July’s record-high inflow of Rs 42,703 crore, as investors remained cautious amid market volatility and global uncertainties.