Equity mutual fund inflows fall 40%to Rs22908 cr in May:AMFI

Equity inflows slowed, gold ETFs saw outflows and debt funds reversed course. Here’s what AMFI’s May data reveals.

Equity mutual fund inflows fell 40 percent to Rs 22,908 crore in May, down from Rs 38,440 crore in April, according to monthly data released by the Association of Mutual Funds in India (AMFI). Even with the sharp drop, equity funds continued to attract fresh money for yet another month.

The mutual fund industry as a whole recorded net outflows of Rs 64,004 crore during the month, compared with net inflows of Rs 3.22 lakh crore in April. The change was largely due to a sharp reversal in debt fund flows and lower inflows across several categories.

Debt mutual funds saw net outflows of Rs 96,949 crore in May after attracting Rs 2.47 lakh crore in April. The sharp turnaround was the biggest reason behind the industry’s overall outflows during the month.

Hybrid funds attracted Rs 10,560 crore in May, down from Rs 20,565 crore in April, but continued to remain in positive territory.

“Other schemes”, which include ETFs and index-linked products, saw inflows of Rs 362 crore, sharply lower than Rs 20,082 crore in April and Rs 30,768 crore in March.

Solution-oriented schemes, which include retirement and children’s funds, attracted Rs 270 crore during the month, largely in line with recent trends.

Closed-ended and interval schemes recorded net outflows of Rs 1,156 crore in May, compared with outflows of Rs 4,467 crore in April.

Gold ETFs recorded net outflows of Rs 725 crore in May, compared with inflows of Rs 3,040 crore in April. The category had seen strong investor interest earlier this year, including inflows of over Rs 24,000 crore in January.

SIP flows moderate

Systematic investment plan (SIP) contributions stood at Rs 30,954 crore in May, marginally lower than Rs 31,115 crore recorded in April. The decline came alongside a broader moderation in equity fund inflows, which fell 40 percent during the month.

However, the drop in SIP contributions was relatively modest compared with the sharp slowdown in overall equity flows. SIP inflows also remained above the Rs 30,000-crore mark for the third consecutive month, suggesting that regular monthly investments continued even as fresh lump-sum allocations and overall mutual fund flows weakened.

“The headline looks sharp, but context is everything. Mid and small caps held their ground, SIPs stayed above Rs 30,000 crore, and the structural story remains intact,” said Suranjana Borthakur, Mirae Asset Investment Managers.

Gold ETFs: Investors book profits after strong run

Gold ETFs slipped into outflow territory in May, recording net withdrawals of Rs 725 crore.

The reversal comes after several months of strong inflows, including Rs 24,040 crore in January and Rs 3,040 crore in April.

The outflow could indicate some profit booking after gold’s strong run, although the category has still attracted significant investor interest this year.

Equity funds: Investors pull back, but mid- and small-caps remain favourites

The biggest change in May was the slowdown in equity inflows. Net inflows into equity mutual funds fell 40 percent to Rs 22,908 crore from Rs 38,440 crore in April. “Equity inflows moderated to Rs 22,908 crore, but they remain firmly positive, showing continued confidence in equities as a long-term wealth creation vehicle,” said Vaibhav Chugh, CEO, Abakkus Mutual Fund.

The moderation was visible across most categories. Flexi-cap funds, which have consistently been among the biggest contributors, saw inflows almost halve to Rs 5,176 crore from Rs 10,148 crore a month earlier. Sectoral and thematic funds also witnessed a sharp drop, with inflows falling nearly 67 percent to Rs 648 crore.

Yet the data also shows investors have not completely turned cautious. Mid-cap and small-cap funds continued to attract sizeable inflows of Rs 4,385 crore and Rs 4,946 crore respectively. Together, the two categories accounted for over Rs 9,300 crore of fresh investments during the month.

Large-cap funds also saw inflows decline to Rs 1,593 crore from Rs 2,525 crore in April, while ELSS funds remained in outflow territory for another month.

The broader takeaway is that investors are putting less money to work than they did in March and April, but they are still willing to take exposure to mid- and small-cap funds despite market volatility. “Continuity at this scale is the real story, not the marginal month-on-month movement,” said Nitin Agrawal, CEO, Mutual Funds, InCred Money.

Debt funds: From Rs 2.47 lakh crore inflow to Rs 97,000 crore outflow

Debt funds saw another sharp swing in May.

After attracting Rs 2.47 lakh crore in April, the category recorded net outflows of Rs 96,949 crore in May. Much of the reversal came from liquid funds, money market funds and overnight funds, which together saw outflows of nearly Rs 70,000 crore.

Liquid funds alone witnessed outflows of Rs 29,681 crore after receiving Rs 1.65 lakh crore in April.

These categories are commonly used by institutions and corporate treasuries to park surplus cash, which means flows can fluctuate sharply from one month to the next.

Other debt categories were also weak. Corporate bond funds saw outflows of Rs 7,010 crore, while low-duration funds witnessed withdrawals of Rs 9,400 crore.

Hybrid funds: Multi-asset and arbitrage funds continue to lead

Hybrid fund inflows fell to Rs 10,560 crore in May from Rs 20,565 crore in April.

Even so, investors continued to favour the same categories that have dominated flows in recent months. Arbitrage funds attracted Rs 5,698 crore, while multi-asset allocation funds brought in Rs 3,929 crore.

Combined, these two categories accounted for the bulk of hybrid inflows during the month.

Interest in balanced advantage funds also cooled sharply, with inflows dropping to Rs 181 crore from Rs 1,773 crore in April.

Disclaimer: Moneywealth research provides stock market news for informational purposes only and should not be construed as investment advice. Readers are encouraged to consult with a qualified financial advisor before making any investment decisions.

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