After several months of strong investments, inflows into equity mutual funds slowed sharply in May as investors became more cautious amid global uncertainties. Concerns around geopolitical tensions and uncertainty over a possible US-Iran peace deal appear to have weighed on sentiment, leading to lower investments across most equity fund categories.
Data released by the Association of Mutual Funds in India (AMFI) on Wednesday showed that actively managed equity mutual funds received net inflows of Rs 22,907.77 crore in May. This was 40.4% lower than the Rs 38,440.20 crore invested in April.
EQUITY FUND CATEGORIES SEE BROAD-BASED DECLINE
Almost all major equity fund categories witnessed lower inflows during the month.
Large-cap funds attracted Rs 1,592.93 crore in May, down 36.9% from Rs 2,524.61 crore in April. Mid-cap fund inflows fell 33.1% to Rs 4,385.06 crore, while small-cap funds received Rs 4,945.57 crore, a decline of 28.2% compared with the previous month.
Flexi-cap funds, which invest across companies of different sizes, saw one of the sharpest declines. Inflows dropped nearly 49% to Rs 5,175.54 crore from Rs 10,147.85 crore in April.
Meanwhile, sectoral and thematic funds recorded inflows of just Rs 647.87 crore, down 66.8% from Rs 1,949.36 crore in the previous month.
SIP FLOWS REMAIN STRONG
Despite the slowdown in lump-sum investments, systematic investment plans (SIPs) continued to show resilience.
SIP contributions stood at Rs 30,954 crore in May, only slightly lower than Rs 31,115 crore recorded in April. This marks the fourth straight month in which SIP inflows remained around the Rs 31,000 crore level, highlighting the continued commitment of retail investors towards long-term investing.
The steady SIP numbers suggest that investors are staying invested through regular monthly contributions even as market conditions remain uncertain.
Aditya Agrawal, CFA, Chief Investment Officer at Avisa Wealth Creators, said, “The AMFI Monthly Report for May 2026 reflects a healthy but more cautious investor sentiment. Equity mutual fund inflows moderated sharply to Rs 22,907 crore, the lowest level in the last one year, amid heightened global uncertainties and market volatility.”
He added, “However, SIP inflows remained resilient at Rs 30,954 crore, marking the third consecutive month above the Rs 30,000 crore level and underscoring continued retail investor confidence. Overall, while near-term risk appetite has softened, the strength of systematic investments indicates that long-term wealth creation through mutual funds remains firmly intact.”
DEBT FUNDS WITNESS SHARP REVERSAL
Debt mutual funds experienced a significant turnaround during May. The category recorded a net outflow of Rs 96,948.51 crore, compared with a net inflow of Rs 2.47 lakh crore in April.
The reversal was largely linked to institutional treasury flows, which tend to fluctuate significantly at the beginning and end of financial periods.
HYBRID FUNDS AND GOLD ETFS LOSE MOMENTUM
Hybrid schemes attracted Rs 10,560.24 crore in May, nearly half of April’s inflow of Rs 20,565.24 crore. Arbitrage funds also saw inflows fall to Rs 5,697.90 crore from Rs 12,378.46 crore.
Gold ETFs, which had received strong investor interest in April, recorded a net outflow of Rs 725.04 crore in May, reversing inflows of Rs 3,040.31 crore a month earlier.
INDUSTRY AUM CROSSES RS 81 LAKH CRORE
Overall, the mutual fund industry reported a net outflow of Rs 64,021.17 crore in May, compared with a net inflow of Rs 3.22 lakh crore in April.
Despite the weaker flows, total assets under management (AUM) stood at a robust Rs 81.58 lakh crore as of May 31, 2026, reflecting the growing scale of India’s mutual fund industry.
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