Equity mutual funds see 71% surge in redemptions over 5 years: ICRA Analytics

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Geopolitical tensions and concerns over a global trade war have led to a sharp increase in redemptions from equity mutual funds, according to ICRA Analytics.

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Redemptions surged by 71% over the past five years, reaching ₹31,444 crore in March 2025, compared to ₹18,386 crore in March 2020. Meanwhile, inflows into these funds grew by 114% during the same period, reaching ₹25,082 crore.

On a year-on-year basis, redemptions increased by 4.5% from ₹30,088 crore in March 2024, while inflows rose by 10.82% from ₹22,633 crore in the same period.
Ashwini Kumar, Senior Vice President and Head of Market Data at ICRA Analytics, attributed the rise in redemptions to escalating geopolitical tensions, global trade war fears, and volatility in domestic equity markets.

“Concerns about higher tariffs from the new US administration and the potential impact on corporate earnings have made investors more cautious. This uncertainty has led to net selling by foreign institutional investors,” Kumar said.

Rising global crude oil prices, partly due to US sanctions on Iran and OPEC+ production cuts, have added to concerns, as India imports more than 80% of its oil requirements.

Despite these challenges, Kumar urged investors to avoid panic selling. He advised diversifying portfolios and taking a long-term approach.

“Market downturns may present opportunities. Staying invested allows for the accumulation of mutual fund units, which can benefit investors as markets recover,” he said.

The steady rise in systematic investment plan (SIP) contributions amid market volatility shows growing investor confidence in long-term wealth creation.

Top performing funds

Some of the top-performing equity and debt mutual funds over the past year include:

  • Quant Small Cap Fund: 49.88% return over 5 years
  • Aditya Birla Sun Life Medium Term Plan: 13.68% return over 3 years

These funds have performed well despite market fluctuations.