Inflow into equity MFs hits 13-month low at ₹19,000 crore in May

Inflow in equity mutual funds slumped to its lowest level in 13 months to ₹19,013 crore in May, with large-cap, mid-cap and small-cap funds experiencing lowered inflows, primarily triggered by profit booking by investors.

This also marks the fifth consecutive month of decline in inflow in equity funds and nearly 22% drop in net inflow on a month-on-month basis from ₹24,269 crore registered in April, according to data released by the Association of Mutual Funds in India (Amfi) on Tuesday (June 10, 2025).

Despite the deceleration, May marked the 51st consecutive month of positive flows into equity-oriented schemes, reflecting sustained investor confidence.

Also, systematic investment plan (SIP) contributions remained robust, registering a record ₹26,688 crore in inflows in May, higher than ₹26,632 crore in the preceding month.

Overall, the mutual fund industry experienced an infusion of over ₹29,000 crore in May compared to ₹2.77 lakh crore in the preceding month.

The inflow has lifted the industry’s assets under management to a record ₹72.2 lakh crore as of May from ₹70 lakh crore in April-end.

According to the data, equity-oriented mutual funds saw an inflow of ₹19,013 crore in May, making it the lowest level since April 2024, when such funds experienced an inflow of ₹18,917 crore.

Such funds witnessed an inflow of ₹24,269 crore in April, ₹25,082 crore in March, ₹29,303 crore in February, ₹39,688 crore in January, and ₹41,156 crore in December.

“The slowdown in net equity inflows can be attributed to several factors, including a rise in equity market performance in May 2025, and a potential phase of consolidation or profit booking by investors.

“Additionally, rising global volatility – triggered by geopolitical tensions following India’s launch of Operation Sindoor against Pakistan and ongoing concerns over global inflation – fuelled a risk-off sentiment among certain investors,” ITI Mutual Fund CEO Jatinder Pal Singh said.

Himanshu Srivastava, Associate Director, Manager Research, Morningstar Investment Research India, also attributed the slowdown in equity inflows to a mix of factors – a less buoyant equity market in May compared to April, concerns around global economic headwinds, and a possible consolidation phase or profit booking in the domestic equities following sharp rallies in the previous months and stretched valuations.

While the equity markets continued their upward momentum in May, gains were relatively subdued.

Within the equity fund categories, Flexi Cap Funds recorded the highest inflows in May, attracting ₹3,841 crore.

However, equity-linked saving schemes saw an outflow of ₹678 crore. Besides, value funds and dividend yield funds experienced an outflow of ₹92 crore and ₹21 crore, respectively.

Large-cap funds witnessed inflows of ₹1,250 crore in May, a decline from ₹2,671 crore in April.

Mid-cap funds saw inflows reducing to ₹2,808 crore in May, compared to ₹3,313 crore in the previous month. Similarly, small-cap funds attracted ₹3,214 crore in May, down from ₹3,999 crore in April.

“Large-cap allocations have cooled sharply as investors are recalibrating their risk-reward expectations. The relatively modest decline in small and mid-cap inflows suggests that the appetite for growth stories remains intact, though tempered by valuation consciousness. The pause should help earnings catch up with prices and create healthier entry points,” Anoop Vijaykumar, Head of equity, Capitalmind MF, said.

Apart from equities, gold exchange traded funds (ETFs) recorded a net inflow of ₹292 crore in May, an improvement from the marginal outflow of nearly ₹6 crore in April.

On the other hand, debt funds registered an outflow of ₹15,908 crore in the month under review after seeing a staggering inflow of ₹2.2 lakh crore in April.

“This was primarily driven by a big swing in net flows in debt-oriented schemes. A net inflow of ₹2.19 lakh crore in April and May 2025 saw a net outflow of just under ₹16,000 crore in debt schemes mainly at the shorter end of maturity as monetary easing was widely expected,” Harshad Patwardhan, Chief Investment Officer at Union Asset Management Company, said.

Corporate bond funds were the only category to see a big jump in net inflows as investors positioned themselves ahead of the policy announcement.