Equity mutual fund inflows slowed sharply in May, suggesting investors became more cautious after an exceptionally strong April.
According to AMFI data, net inflows into equity schemes stood at ₹22,907 crore in May, down from ₹38,440 crore in April.
The decline of around ₹15,500 crore, or nearly 40%, came after one of the strongest months on record. Even so, equity inflows remained well above historical averages and were around 20% higher year-on-year.
Flexi-cap funds remain investors’ preferred choice
Flexi-cap funds continued to attract the largest share of fresh investments.
May inflows by category
- Flexi-cap funds: ₹5,175 crore.
- Small-cap funds: ₹4,945 crore.
- Mid-cap funds: ₹4,385 crore.
- Large-cap funds: ₹1,592 crore.
Although inflows across these categories declined compared with April, investors continued to favour diversified and growth-oriented schemes.
Flexi-cap funds allow fund managers to allocate money across large-, mid- and small-cap stocks depending on market conditions, a feature that has kept the category popular.
Mid-cap and small-cap appetite remains intact
Higher-risk segments continued to see healthy inflows.
Compared with April:
- Small-cap fund inflows declined 28%.
- Mid-cap fund inflows fell 33%.
Despite concerns around valuations after the sharp rally in broader markets, retail investors have continued allocating money to these segments.
The trend suggests investors are becoming more selective rather than moving away from equities.
Some categories witnessed outflows
Not all segments attracted fresh money.
Net outflows in May
- ELSS funds: ₹650 crore.
- Dividend Yield funds: ₹97 crore.
The data indicates that investors preferred categories with greater flexibility and stronger growth potential.
Debt funds reverse course
Debt mutual funds witnessed a sharp reversal in May.
The category recorded net outflows of ₹96,948 crore, compared with inflows of ₹2.47 lakh crore in April.
Major debt fund outflows
- Liquid funds: ₹29,680 crore.
- Money market funds: ₹24,691 crore.
- Overnight funds: ₹15,524 crore.
Among debt categories, only credit risk funds remained in positive territory, attracting ₹49.46 crore.
Hybrid fund inflows nearly halved
Hybrid schemes also saw slower inflows.
Net inflows declined to ₹10,560 crore in May from ₹20,565 crore in April.
Category-wise inflows
- Arbitrage funds: ₹5,697 crore.
- Multi-asset allocation funds: ₹3,928 crore.
- Aggressive hybrid funds: ₹655 crore.
- Balanced advantage funds: ₹181 crore.
- Equity savings funds: ₹75 crore.
- Conservative hybrid funds: ₹22 crore.
The figures suggest investors continued to prefer diversified investment strategies.
Passive products witness sharp slowdown
Other schemes, including passive products, recorded a steep decline in inflows.
Total inflows into these categories dropped to ₹361 crore, compared with ₹20,082 crore in April.
Gold and ETF flows
- Gold ETFs: Outflow of ₹725 crore.
- Other ETFs: Outflow of ₹620 crore.
- Index funds: Inflow of ₹943 crore.
- Overseas fund of funds: Inflow of ₹763 crore.
Industry assets dip marginally
Open-ended mutual funds recorded net outflows of ₹62,848 crore in May, compared with inflows of ₹3.26 lakh crore in April.
As a result, industry assets under management (AUM) slipped slightly.
- April AUM: ₹81.71 lakh crore.
- May AUM: ₹81.38 lakh crore.
During the month, 13 new open-ended schemes were launched.
Together, they mobilised ₹471 crore.
Among them, Motilal Oswal Contra Fund raised the highest amount at ₹267 crore.
Retail participation remains strong
Despite the moderation in flows, the broader trend remains positive.
India’s mutual fund industry’s AUM has expanded from around ₹24 lakh crore in FY20 to more than ₹70 lakh crore, supported by rising retail participation and growing adoption of systematic investment plans.
The May data suggests investors have become more selective in allocating capital, rather than turning away from equities altogether.
TL;DR
Equity mutual fund inflows fell to ₹22,907 crore in May from ₹38,440 crore in April. Flexi-cap, mid-cap and small-cap funds continued to attract strong inflows, indicating that investors remain positive on equities but are becoming more selective.
AI Summary
- Equity mutual fund inflows fell by nearly ₹15,500 crore in May.
- Flexi-cap funds attracted the highest inflows at ₹5,175 crore.
- Mid-cap and small-cap funds continued to see strong investor interest.
- Debt funds recorded outflows of ₹96,948 crore.
- Industry AUM slipped to ₹81.38 lakh crore.
