The outflows were driven largely by liquid, money market and ultra-short duration funds during the month, reflecting year-end cash requirements of corporates and institutional investors.
Commenting on the December AMFI data, Himanshu Srivastava, Principal Research at Morningstar Investment Research India, said debt-oriented mutual fund categories witnessed net outflows, significantly higher than the previous month, due to pronounced year-end treasury activity and evolving interest-rate expectations.
Srivastava said corporates and institutions drew down surplus cash for advance tax payments, balance-sheet adjustments and working-capital needs, adding that such seasonal outflows are typical in the December quarter and do not indicate any structural weakness in debt fund demand.
AMFI data showed that, except for overnight funds and floater funds, all debt fund categories recorded net outflows during the month. Medium- to long-duration funds, dynamic bond funds, gilt funds and long-duration categories continued to see redemptions, indicating caution in taking active duration positions.
Corporate bond funds and banking and PSU funds also witnessed net outflows, largely due to institutional profit-taking and portfolio rebalancing rather than credit-related concerns. Credit conditions remained benign during the period, according to Morningstar.
Floater funds, however, recorded net inflows in December as investors sought lower duration risk and relatively stable yields amid uncertainty over the timing and pace of further rate cuts.
First Published: Jan 9, 2026 12:42 PM IST