Mutual Funds – Large-Cap Schemes Lead June Inflows Despite Weak Returns

Mutual Funds –India’s mutual fund industry witnessed a notable contrast in June as investors continued to pour money into large-cap schemes despite their weaker performance so far this year. According to a report released by Vallum Capital on Saturday, steady inflows driven by systematic investment plans (SIPs) helped large-cap funds emerge as the biggest recipient of fresh investments during the month.

Large-Cap Funds Attract Strongest Investor Interest

Large-cap mutual funds received net inflows of Rs 9,656 crore in June, making them the top-performing category in terms of fund collection. This came even though the segment has declined 5.4 percent on a year-to-date basis, making it the weakest-performing equity category among its peers. The report noted that the resilience of SIP-based investments continued to support these funds, with regular monthly contributions helping offset market volatility.

Mid-Cap and Small-Cap Funds Continue to Draw Attention

While large-cap schemes led in total inflows, mid-cap funds recorded the biggest month-on-month improvement, with fresh investments rising by more than Rs 1,336 crore. Small-cap funds also maintained healthy investor participation, attracting Rs 4,508 crore during June.

Among the major equity categories, small-cap funds delivered the strongest performance this year, generating a year-to-date return of 9.3 percent. The sustained interest indicates that many investors continue to seek opportunities in companies with higher growth potential despite market fluctuations.

Healthcare Sector Maintains Strong Momentum

Healthcare remained one of the strongest-performing sectors in 2026, registering nearly 15 percent year-to-date gains. The report attributed this performance to continued demand for businesses with relatively stable earnings, particularly hospitals, diagnostic service providers, and pharmaceutical companies.

Investor confidence in the sector was also reflected in fund flows, with healthcare-focused investments increasing by Rs 294 crore during June. Analysts believe the sector continues to benefit from its defensive characteristics amid an uncertain global economic environment.

Overall Asset Inflows Ease During June

Despite healthy participation in equity-oriented schemes, overall net asset-level inflows declined during the month. Total inflows stood at Rs 48,826 crore in June compared with Rs 56,886 crore in May, representing a 14 percent month-on-month decline.

However, equity funds continued to strengthen, receiving Rs 48,914 crore in fresh investments, an increase of Rs 3,215 crore over the previous month. Equity returns remained relatively modest at 1.8 percent during the period.

In contrast, fixed income investments experienced significant withdrawals, with net outflows reaching Rs 51,489 crore. Money market funds also saw deeper outflows of Rs 57,277 crore, suggesting institutional investors continued reducing allocations to traditionally defensive investment options.

Gold Sees Fresh Buying Despite Short-Term Weakness

Precious metals attracted strong investor interest even after posting negative monthly returns. The category recorded net inflows of Rs 8,678 crore despite delivering a 6.3 percent decline during the month.

The report indicated that investors largely viewed the correction as an opportunity to increase exposure to gold rather than reduce holdings, reflecting continued confidence in the asset’s long-term role as a portfolio diversifier.

Real Estate and Banking Show Mixed Trends

Real estate investments delivered an impressive 14.4 percent gain in July, effectively recovering losses accumulated over the previous year within a single month. Meanwhile, private banking funds recorded fresh inflows of Rs 802 crore during June, highlighting selective investor confidence in the banking space.

Broader banking indices, however, experienced net outflows, pointing to a cautious approach toward the sector overall. Technology-focused funds also continued attracting investors despite remaining down 17.3 percent this year, indicating that many participants are using lower valuations to gradually increase their exposure.