Equity MF inflows fall 22% to Rs 19,013 cr in May; what fund managers, analysts say

Equity mutual fund (MF) inflows dropped nearly 22 per cent to Rs 19,013.12 crore, with funds mobilization for the month standing at Rs 56,604.45 crore and redemptions at Rs 37,591.33 rcore. Net equity MF inflows stood at Rs 24,269 crore in April. Nonetheless, this was 51st month of positive equity inflows, starting from March 2021.

The net Assets Under Management (AUM) stood at Rs 32,05,375 crore as on May 31.

Jatinder Pal Singh, CEO at ITI Mutual Fund said the slowdown in net equity inflows can be attributed to several factors, including a jump in stock market in May 2025, and a potential phase of consolidation or profit booking by investors. "Additionally, rising global volatility—triggered by geopolitical tensions following India’s launch of Operation Sindoor against Pakistan and ongoing concerns over global inflation—fuelled a risk-off sentiment among certain investors,” he said.

On a year-on-year basis, inflows dropped by nearly 45.20 per cent from Rs 34,697 crore last year as persistent concerns over India-US trade relations following the conclusion of the 90-day pause continued to act as an external headwind, said Ashwini Kumar, Senior Vice President and Head Market Data at ICRA Analytics.

While equity inflows moderated in May, investor confidence remains strong with SIP contributions holding steady, said Suranjana Borthakur, Head of Distribution & Strategic Alliances at Mirae Asset Investment Managers (India).

He said the dip in large-cap and flexi-cap inflows reflects near-term caution, but attractive valuations in large-caps could lead to renewed interest. 

"Mid- and small-cap flows have also eased slightly, though long-term investor appetite for these segments remains intact. What’s particularly encouraging is the rise in hybrid categories—especially arbitrage, BAFs, and multi-asset funds—indicating that investors are using these as strategic tools to stay invested while managing short-term volatility. Arbitrage funds, in particular, are being seen as a safe space to temporarily park funds ahead of further deployment," he said.

Overall, Borthakur felt investors appear to be making balanced and thoughtful allocation decisions across asset classes, aligned with their risk appetite and investment horizons.

Harshad Patwardhan, Chief Investment Officer at Union Asset Management Company said gross SIP flows remained steady at Rs 26,688 crore. Amid uncertain environment and volatility, Patwardhan urged investors not to panic and continue with disciplined way of investing to achieve their long-term financial goals.

With inflows to the tune of Rs 3,214.21 crore, small cap funds continued to garner investor interest witnessing a growth of 17.97 per cent from Rs 2,724.67 crore in May 2024. 

"The Reserve Bank of India’s latest move to slash repo rate by 50 basis points is expected to have a positive impact on the market and this is likely to draw retail investor’s interest in mutual funds. The industry AUM has touched Rs 72.20 lakh crore in May 2025 and we expect the industry to breach the Rs 100 lakh crore mark in the next few years," Kumar of ICRA Analytics said.

Monthly SIP contributions stood at a record Rs 26,688 crore, with the number of contributing accounts rising to an all-time high of 8.56 crore.
"Equity inflows moderated to Rs 19,013 crore this month, reflecting cautious investor sentiment amidst market volatility. Such phases often witness a natural reallocation towards hybrid and arbitrage schemes, offering a more balanced approach during uncertain times. The trend highlights the maturing investment behaviour among Indian investors," said Venkat N Chalasani - Chief Executive at AMFI