Equity Mutual Fund Inflows Plummet Despite Market Gains; Mutual Fund AUM Hits Record High

Net inflows into equity mutual funds sharply declined by 21.66% on a month-over-month basis to Rs 19,013 crore in May 2025, marking the lowest point in a year despite a climbing stock market. Meanwhile, the industry's total assets under management (AUM) achieved a record high of Rs 72.2 lakh crore, buoyed by positive performances in select debt categories.

Data released by the Association of Mutual Funds in India (AMFI) on June 10 revealed that equity mutual fund inflows dropped to Rs 18,995 crore in May 2025 from Rs 24,253 crore in April 2025. This 12-month low in equity inflows came amid a rise of over 1.5% in the Sensex and a gain of over 1.7% in the Nifty 50, pointing to heightened investor caution due to high valuations and geopolitical concerns.

Akhil Chaturvedi, Executive Director & Chief Business Officer at Motilal Oswal AMC, noted the 22% downturn in equity net sales, which was mainly driven by a Rs 5,000 crore increase in redemptions in May compared to April. Largecap funds suffered the greatest impact, with net inflows plummeting by 53.19% to Rs 1,250 crore. Midcap and small-cap funds also experienced downturns, reflecting investors' caution over potentially inflated valuations in these segments.

Mid-cap fund inflows declined to Rs 2,808.7 crore in May from Rs 3,313 crore in April, while small-cap fund inflows fell to Rs 3,214 crore from Rs 3,999.95 crore, suggesting a pause in retail enthusiasm. However, contributions to systematic investment plans (SIPs) remained strong at Rs 26,688 crore in May, nearly consistent with April's Rs 26,632 crore, indicating steady retail investor confidence in this investment approach.

On the debt front, the sector saw a reversal with net outflows totaling Rs 15,908 crore, a significant shift from the Rs 2.19 lakh crore net inflow observed in April. These outflows were primarily driven by liquid funds and overnight funds, which saw redemptions of Rs 40,205 crore and Rs 8,120 crore, respectively. Narender Singh of Growth Investing attributed this reversal to caution over potential interest rate hikes.

Nevertheless, corporate bond funds and money market funds achieved positive net inflows of Rs 11,983 crore and Rs 11,223 crore, respectively. Despite the decline in both equity and debt inflows, the mutual fund industry's total AUM increased to a record Rs 72.20 lakh crore, reflecting market appreciation and robust SIP contributions. (ANI)

(With inputs from agencies.)