Are Flexi-Cap Funds and Gold ETFs Becoming the New Safe Haven for Investors?
Even as equity markets turned cautious in December, investor money continued to flow steadily into select mutual fund categories, suggesting that confidence in long-term opportunities remains intact. Flexi-cap funds, gold ETFs and systematic investment plans (SIPs) emerged as clear winners, even as overall equity mutual fund inflows saw a marginal dip.
The Indian mutual fund industry’s assets under management (AUM) declined slightly to ₹80.2 lakh crore in December 2025, from ₹80.8 lakh crore in November, reflecting market volatility and sustained foreign institutional investor (FII) outflows. Benchmark indices also softened during the month, with the Sensex down 0.6% and the Nifty slipping 0.3%, while mid- and small-cap indices saw deeper cuts.
Yet beneath the surface, investor behaviour revealed a more nuanced story.
Equity Mutual Funds Stay Resilient Despite Volatile Markets
Equity mutual funds recorded net inflows of ₹28,054 crore in December, marking the 58th consecutive month of positive flows into equity-oriented schemes. This consistency underscores the structural shift in Indian household savings toward financial assets.
Retail participation remained robust:
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26.4 lakh new folios were added during the month
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Total mutual fund folios climbed to 26.12 crore
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Retail AUM across equity, hybrid and solution-oriented schemes reached ₹47.36 lakh crore
These numbers highlight that despite short-term market fluctuations, investors continue to commit capital with a long-term mindset.
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Flexi-Cap Funds Lead the Pack as Investors Seek Balance
Flexi-cap funds emerged as the standout category in December, recording a 23.2% month-on-month jump in inflows to ₹10,019 crore, making them the largest contributor to equity fund inflows.
According to Himanshu Srivastava, Principal Research at Morningstar Investment Research India, investor behaviour is becoming more measured.
“The moderation in flows could be attributed to cooling momentum in mid-cap and small-cap segments, where inflows tapered after a strong run-up in valuations and periodic market corrections. Investors are adopting a more selective and disciplined approach,” he said.
The launch of the Abakkus Flexi Cap Fund, which alone mobilised ₹2,468 crore, further boosted the category.
Vaiibhavv Chugh, CEO of Abakkus Mutual Fund, added:
“Flexi-cap funds continue to be preferred as they allow inbuilt flexibility to manoeuvre across market caps. The industry-wide emphasis on asset allocation as a strategy to navigate volatility is clearly reflected.”
Mid-Cap and Small-Cap Inflows Cool, But Stay Healthy
While flexi-cap funds gained traction, other equity categories saw moderation:
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Mid-cap fund inflows fell 6.9% to ₹4,176 crore
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Small-cap inflows declined 13.2% to ₹3,824 crore
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Large-cap inflows dipped to ₹1,567 crore
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ELSS funds saw net outflows of ₹718 crore
Suranjana Borthakur, Head of Distribution & Strategic Alliances at Mirae Asset, explained the shift in preference.
“With mid- and small-cap valuations appearing relatively expensive and market performance uneven, flexi-cap funds have emerged as a preferred option. Investors are favouring diversified categories over concentrated thematic exposure,” she said.
Sectoral and thematic funds saw the steepest fall, with inflows declining nearly 49% month-on-month, signalling waning appetite for high-risk thematic bets.
Here’s What Happened Today and Why Traders Reacted
Market participants interpreted the AMFI flow data as a sentiment-positive but valuation-aware signal.
Here is how traders reacted:
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AMC stocks traded firm, as sustained SIP growth supports long-term revenue visibility
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Select banking stocks gained marginally on expectations of continued retail liquidity
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Gold-linked ETFs and commodity counters saw renewed interest amid rising allocation trends
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Broader indices remained rangebound, suggesting flows are supportive but not euphoric
For professional traders, the takeaway was clear: retail money remains disciplined rather than speculative.
Gold ETFs Shine as Investors Strengthen Portfolio Protection
One of the most striking trends was the surge in gold ETF inflows. December witnessed an all-time high of ₹11,000 crore in gold ETF investments, while silver ETFs attracted ₹3,962 crore.
The passive fund segment’s total AUM climbed to a record ₹14.57 lakh crore, driven largely by precious metals ETFs.
Borthakur noted:
“Gold has had an exceptional year. It is increasingly viewed not only as a hedge but as a strategic, long-term portfolio component.”
Srivastava added:
“Indian investors increasingly see gold ETFs as a regulated, liquid and cost-efficient alternative to physical gold, particularly during equity and bond market volatility.”
For investors, this indicates a growing preference for balanced asset allocation rather than pure equity risk.
SIP Inflows Hit Record High, Reinforcing Long-Term Discipline
SIP inflows rose to an all-time high of ₹31,002 crore in December, reflecting unwavering retail discipline. Total SIP AUM now stands at ₹16.63 lakh crore, accounting for over 20.7% of industry assets.
Key data points:
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60.46 lakh new SIPs registered in December
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Contributing SIP accounts rose to 9.79 crore
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SIP stoppage ratio increased to 85%, suggesting churn but continued net growth
This reinforces that Indian investors are increasingly treating mutual fund investing as a habit rather than a tactical decision.
What This Means for Traders and Investor Portfolios
For traders, the message from December flows is subtle but important:
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Momentum in small-caps may cool further
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Flexi-cap stocks could attract sustained institutional interest
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Gold-linked instruments may remain in focus during volatile phases
For long-term investors, the trend strengthens the case for:
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Diversified equity exposure through flexi-cap funds
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Strategic gold allocation for portfolio stability
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Continued SIP discipline rather than timing the market
The rise in hybrid and multi-asset fund inflows also suggests that investors are prioritising risk-adjusted returns over aggressive chasing of performance.
Investor Behaviour Signals Maturity, Not Fear
While headline numbers show a minor dip in overall AUM, the underlying behaviour tells a more encouraging story. Investors are not exiting the market — they are rebalancing intelligently, favouring flexibility, diversification and protection.
The growing popularity of flexi-cap funds, multi-asset strategies and gold ETFs suggests that Indian retail investors are evolving from return-chasers into portfolio builders. That shift may prove to be one of the most constructive developments for markets in 2026.
