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| Scheme Name | 1-Year Return | Invest Now | Fund Category | Expense Ratio |
|---|---|---|---|---|
| Axis Nifty 50 Index Fund | +32.80% | Invest Now | Equity: Large Cap | 0.12% |
| Axis Nifty 100 Index Fund | +38.59% | Invest Now | Equity: Large Cap | 0.21% |
| Axis Nifty Next 50 Index Fund | +71.83% | Invest Now | Equity: Large Cap | 0.25% |
| Axis Nifty 500 Index Fund | — | Invest Now | Equity: Flexi Cap | 0.10% |
| Axis Nifty Midcap 50 Index Fund | +46.03% | Invest Now | Equity: Mid Cap | 0.28% |
This marked a sharp reversal in momentum in the final month of the financial year.
According to the latest AMFI data, all 16 debt fund categories posted net outflows during March.
Key drivers behind the March dip
Year-end advance tax withdrawals by corporates
“Debt-oriented funds ended the last month of FY25 on a weak note,” said Nehal Meshram, Senior Analyst – Manager Research, Morningstar Investment Research India.
This trend, she explained, is consistent with the seasonal pattern typically observed at the end of every financial year.
Corporates and large institutions tend to redeem short-duration debt investments to meet advance tax payments, annual compliance needs, and balance sheet adjustments.
Liquid and ultra-short categories took the biggest hit
Liquid funds — widely used by companies for short-term parking of surplus cash — witnessed the steepest outflows at ₹1,33,034 crore, accounting for nearly two-thirds of the overall debt fund redemptions.
Overnight funds saw outflows of ₹30,015 crore, followed by money market funds at ₹21,301 crore.
Long duration funds showed stability
Interestingly, longer-duration funds such as medium to long-duration and gilt funds witnessed relatively muted redemptions.
This can be attributed to investor expectations that the RBI may adopt a softer monetary policy stance in the coming quarters, backed by cooling inflation and the possibility of rate cuts.
“With the Reserve Bank of India maintaining a cautious yet supportive stance, investors turned to debt funds for capital preservation and predictable returns,” Meshram added.
She noted that the broader environment of easing inflation, global rate pause signals, and improving liquidity has made debt funds attractive again.
Strong FY25 overall for debt funds
FY25 marked a solid turnaround for debt mutual funds, which had seen net outflows of ₹23,097 crore in FY24.
The sharp reversal was led by favorable macroeconomic tailwinds such as declining inflation and improved real interest rates.
Apart from seasonal factors, some investors moved into debt funds earlier in the year as equity markets remained volatile due to global geopolitical tensions and potential U.S. tariff escalations.
This “flight to safety” strategy further boosted debt fund flows for most of FY25, until the March dip.
What to watch in April
Market experts believe the March outflows are transient.
Akhil Chaturvedi, Executive Director & Chief Business Officer at Motilal Oswal AMC, noted that “selling in debt at the shorter end is mostly on account of advance tax and year-end considerations.”
He added that at the long end, “investors seem to have booked profits after the recent rally in long-dated bonds.”
As FY26 begins, inflows into debt funds may pick up again, especially if the bond yields continue softening — improving return prospects from duration strategies.
