Equity mutual fund inflow swells to `34,697 crore in May, SIP at new high of `20,904 crore

New Delhi: Equity mutual funds witnessed a staggering growth with inflow reaching a record high of Rs 34,697 crore in May, marking a 83 per cent surge from the preceding month, propelled by contributions from thematic funds and intermittent corrections that provided buying opportunity to investors.

The inflow suggests investors’ confidence in the equity markets despite the continued volatility.

This also marks the 39th consecutive month of net inflows in equity funds, data with the Association of Mutual Funds in India (AMFI) showed on Monday.

Moreover, the Systematic Investment Plan (SIP) book, which primarily comprises retail money, rose to Rs 20,904 crore in May, from Rs 20,371 crore in April, marking the second consecutive month of inflows exceeding Rs 20,000 crore.

Overall, the mutual fund industry has witnessed an inflow of Rs 1.1 lakh crore in the month under review as compared to Rs 2.4 lakh crore in April.

With these inflows, the industry’s net assets under management rose to Rs 58.91 lakh crore in May-end from Rs 57.26 lakh crore in April-end.

As per the data, equity-oriented schemes witnessed an inflow of Rs 34,697 crore in May, way higher than Rs 18,917 crore in April.

The net flows in equity-oriented mutual funds took the segment past the Rs 25 lakh crore mark to close at their record high of Rs 25.39 lakh crore in May, Venkat Chalasani, Chief Executive of AMFI, said.

Except for the focused and equity-linked saving schemes (ELSS) categories, all the other categories witnessed good net inflows. Sector/thematic funds continue to attract investor attention with the highest net inflows of Rs 19,213 crores during the month.

This was largely owing to the new fund offering (NFO) of the HDFC Manufacturing Fund, which collected around Rs 9,563 crore.

Further, the small-cap category witnessed flows of Rs 2,724 crore in May, a growth of almost 23 per cent as compared to April. The investors’ interest in large-cap funds seemed relatively low as the category saw inflows of Rs 663 crore, suggesting a preference for more specialised and potentially higher-yielding opportunities.

“Intermittent corrections provided investors some buying opportunity in a market which has largely witnessed a secular uptrend for a long time now. Moreover, the expectation of the NDA-led government coming back to power also propelled buying from investors, as they would have expected the markets to rally further if the NDA government is indeed formed,” Himanshu Srivastava, Associate Director - Manager Research at Morningstar Investment Research India, said.

Manish Mehta, National Head - Sales, Marketing & Digital Business at Kotak Mahindra AMC, said that record inflows were aided by NFO listings and investors taking advantage of volatility to add equity schemes to their investments through SIPs as well as lumpsum.

Apart from equities, debt category schemes experienced net inflows of Rs 42,495 crore on preference for safety which drove the flow in the segment.

However, the inflow dropped by almost 78 per cent from Rs 1.9 lakh crore seen in April.

Of the debt schemes, liquid funds recorded inflows to the tune of Rs 25,873 crore.

The categories which witnessed net outflows are short duration, medium duration, dynamic bond, credit risk, gilt fund and floater fund.

Besides, hybrid category schemes attracted Rs 17,991 crore and index funds and other ETFs collectively garnered Rs 15,180 crore.