Inflows into equity mutual funds rebounded even as uncertainties around the ongoing geopolitical unrest, inflation and incessant foreign selling persist.
Net investments into equity and equity-linked schemes rose 16% over the previous month to Rs 18,529.4 crore in May, according to data released by the Association of Mutual Funds in India. That’s the fifteenth straight month of investments into such stock plans.
Indian equity benchmarks, however, declined for the second consecutive month in May as volatility spiked. The Sensex fell 2.5% and the Nifty 50 declined 2.8% during the month.
Category-Wise Trends
All segments continued to see inflows in May.
Multi caps witnessed the least investments among all categories, while large caps saw the most.
AMFI started reporting granular data since April 2019.
SIP Contribution
Monthly contributions into systematic investment plans rose above Rs 12,000 crore after a month.
The contributions had hit an all-time high of Rs 12,327.9 crore in March.
NS Venkatesh, chief executive officer at AMFI, said May was a reasonably “good month” for the mutual fund industry. “The overall outflows was led by debt-oriented schemes. Investors pulled out of such funds because of rate hikes by the central bank,” he said on a conference call on Thursday. “Yesterday, we saw another 50-basis-point hike, which will also have an impact on debt schemes in the short term.”
Despite volatility and interest rates hikes to fight inflation, the industry, according to Venkatesh, is seeing good numbers, especially in equity mutual funds. “Retail investors have continued to participate in the mutual fund story.”
Debt Funds
Liquid funds—used by companies to park short-term cash—witnessed inflows for the second month in a row. But that’s the lowest since August 2021.
Investors withdrew from credit risk funds for the sixth straight month.
Net Flows
All mutual fund schemes, debt and equity, saw outflows, dragged by ultra short duration funds, low duration funds, money market funds and short duration funds.
Money market funds saw outflow of Rs 14,598.6 crore in May against an inflow of Rs 16,193.7 crore in April.
Average under management stood at Rs 37.3 lakh crore against Rs 38.88 lakh crore in April. Net AUM, too, fell to Rs 37.2 lakh crore from Rs 37.56 lakh crore in the previous month.
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