Equity mutual funds attracted Rs 39,688 crore in January, boosted by strong inflows into small and midcap schemes despite ongoing market volatility.

However, this was 3.5% lower than the net inflow of Rs 41,156 crore recorded in December. The latest fund infusion by investors marks the 47th consecutive month of net inflows into the sector.

Sectoral or thematic equity schemes attracted the most investors, with a net inflow of Rs 9,016 crore, significantly lower than the Rs 15,331 crore inflow seen in December, according to data released on Wednesday by the Association of Mutual Funds in India (Amfi).

The midcap category saw an inflow of Rs 5,148 crore in January 2025, while the smallcap category saw an infusion of Rs 5,721 crore, according to the data.

Small and midcap mutual fund schemes continued to attract investors, with inflows indicating a preference for these segments, owing largely to the high returns generated in recent years, according to Himanshu Srivastava, Associate Director- Manager Research, Morningstar Investment Research India.

"Since both the segments witnessed sharp correction, investors would have chosen to make use of this opportunity and enhance their exposure to these segments," according to him.

The large schemes, which are recommended by a slew of experts as a safer bet, saw inflows rise to Rs 3,063 crore in January from Rs 2,010 crore in December, while the large & midcap category saw an infusion of Rs 4,123 crore, according to Amfi data.

Apart from equities, debt funds saw an inflow of Rs 1.28 lakh crore in January, compared to an outflow of Rs 1.27 lakh crore in December.

Inflows into gold exchange traded funds totaled Rs 3,751 crore.

As of January 31, 2025, mutual fund assets under management totaled Rs 67.25 lakh crore, up from Rs 66.93 lakh crore in December 2024.