Equity Mutual Fund Inflows 12-month Low in May; Mid- and Small-Cap Funds Stay Strong

Equity mutual fund inflows eased in May as allocations to sectoral and thematic funds slowed, though mid- and small-cap schemes continued to draw strong interest from retail investors.

Data from the Association of Mutual Funds in India showed equity mutual funds recorded net inflows of ₹229.08 billion in May, down from ₹384.40 billion in April.

Mid-cap funds received net inflows of ₹43.85 billion during the month, while small-cap funds drew ₹49.46 billion, underscoring continued investor appetite for broader market segments despite volatility in equities.

Flexi-cap funds, which invest across market capitalisations, saw inflows of ₹51.76 billion in May, lower than in recent months but still among the largest contributors within equity-oriented schemes.

Sectoral and thematic funds recorded net outflows of ₹6.48 billion in May, pointing to some easing in tactical allocations after strong interest in thematic offerings over the past year.

Large-cap funds recorded inflows of ₹15.93 billion in May, while large- and mid-cap funds attracted ₹32.78 billion.

Within hybrid schemes, arbitrage funds drew strong inflows of ₹56.98 billion, helping hybrid-oriented schemes garner overall net inflows of ₹105.60 billion during the month.

Gold exchange-traded funds recorded net outflows of ₹7.25 billion in May, compared with inflows of ₹30.40 billion in April, suggesting some profit-taking after the sharp rally in gold prices earlier this year.

Across the mutual fund industry, open-ended schemes posted a net outflow of ₹628.48 billion in May, compared with ₹3268.84 billion in April, largely due to withdrawals from debt-oriented schemes.

Debt mutual funds saw net outflows of ₹969.49 billion during the month. Liquid funds alone recorded outflows of ₹296.81 billion, while money market funds witnessed outflows of ₹246.92 billion.

The mutual fund industry's total assets under management stood at ₹81.39 trillion at the end of May, slightly lower than ₹81.46 in April.

Meanwhile, fund houses launched several new schemes during the month, including index funds and thematic offerings, reflecting continued product expansion amid steady retail participation in capital markets.