In May, the Sensex rose by 1.51 percent, while the Nifty 50 saw a 1.71 percent jump. Net inflows into equity mutual funds dropped by 21.66 percent to a one-year low of Rs 19,013.12 crore in May compared to the previous month, according to data released by the Association of Mutual Funds of India (AMFI) on June 10.

Despite this decline, the overall net assets under management (AUM) of the mutual fund industry reached Rs 72.20 lakh crore in May, a significant increase from Rs 69.99 lakh crore in April. The mutual fund industry recorded net inflows of Rs 29,108.33 crore in May.

After May, net inflows into open-ended equity funds have remained positive for 51 consecutive months, starting from March 2021.

The drop in inflows occurred despite market recovery. In May, the BSE benchmark Sensex rose by 1.51 percent, and NSE Nifty50 jumped by 1.71 percent.

On the other hand, the monthly inflow into mutual funds via the Systematic Investment Plan (SIP) route increased by 0.21 percent to a new high of Rs 26,688 crore in May, as per the latest data from AMFI on June 10, despite a decrease in inflows into the equity category.

Himanshu Srivastava, Associate Director- Manager Research at Morningstar Investment Research India, attributed the broader slowdown in equity inflows to various factors such as a less buoyant equity market in May compared to April, concerns around global economic headwinds, and a possible consolidation phase in domestic equities following sharp rallies in previous months.

Equity Funds:

• Inflows into Largecap Fund category dropped by 53.19 percent to Rs 1,250.47 crore.
• Net inflows into smallcap funds decreased by 19.64 percent to Rs 3,214.21 crore.
• Midcap funds saw a 15.25 percent decline in inflows to Rs 2,808.68 crore in May.

Notably, multicap funds saw a 17.54 percent rise in inflows to Rs 2,999.29 crore, while flexicap funds experienced a 30.68 percent decrease in inflows to Rs 3,841.32 crore during May.

Debt Funds:

Debt mutual funds recorded net outflows of Rs 15,908.48 crore in May compared to inflows of Rs 2.19 lakh crore in April. Liquid Funds saw net outflows of Rs 40,205.36 crore, while Overnight Funds witnessed net selling of Rs 8,120.03 crore during May.

Hybrid Funds:

Hybrid funds, which invest across debt, equity, and commodities, saw a 45.74 percent rise in net inflows to Rs 20,765.05 crore in May. Arbitrage funds recorded a 33.18 percent increase in net buying to Rs 15,701.97 crore during the month.

Gold Funds:

Gold exchange-traded funds (ETFs) saw a net inflow of Rs 291.91 crore in May, an improvement from the marginal outflow of Rs 5.82 crore in April. This renewed interest in May indicates a gradual return of investor confidence in gold as a strategic hedge.

Source: Moneycontrol