Debt mutual fund inflows fall 44% in February

Debt-oriented mutual funds in India continued to attract net inflows in February 2026, totaling ₹42,106 crore, down 43.7% from ₹74,827 crore in January. The moderation reflects a tapering of year-end treasury redeployments and a cautious investor approach.

Investors concentrated flows at the shorter end of the yield curve. Liquid funds led the category with ₹59,077 crore, followed by money market funds at ₹6,267 crore and low-duration funds at ₹2,329 crore.

Overnight funds and ultra-short duration funds saw outflows of ₹14,006 crore and ₹4,374 crore, respectively, as investors slightly extended maturities to capture better returns with minimal additional risk.

Duration- and accrual-focused categories continued to witness weak flows. Corporate bond funds posted outflows of ₹2,302 crore, short-duration funds ₹1,917 crore, and banking & PSU funds ₹1,473 crore, while dynamic bond, medium-to-long, and long-duration funds remained under pressure.

Nehal Meshram, Senior Analyst – Manager Research at Morningstar Investment Research India, said February’s debt fund flows highlight a cautious investor approach, with positioning centered on liquidity, carry, and capital stability.

Feroze Azeez, Joint CEO of Anand Rathi Wealth Limited, noted, “Debt funds continued to see positive inflows for the second consecutive month, although at a lower level compared with January. Overall, investors are maintaining meaningful exposure while gradually diversifying across asset classes in response to evolving market conditions.”

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