Equity fund inflows plummet further in May but SIP contribution hits a high

• This is the lowest inflow since November 2022 and the fall is mainly due to profit-booking.
  
• Inflows into small-cap mutual funds rose to ₹3,283 crore in May, while large-cap funds saw net outflows of ₹1,262 crore.
  
• Inflows into systematic investment plans (SIP) increased to a record ₹14,479 crore in May, up from ₹13,727 crore in April.
  

Inflows into equity mutual funds almost halved to ₹3,240 crore in May, compared to ₹6,480 in April as high market valuations made investors book profits and stay away from fresh investments.

This is the lowest since November 2022, when equity inflows stood at ₹2,258 crore, as per data released by Association of Mutual Funds in India (AMFI).

When it comes to small-cap mutual funds, inflows rose to ₹3,283 crore in May, the highest since April 2019. Large-cap funds, on the other hand, saw net outflows of ₹1,262 crore. Equity-linked savings scheme (ELSS) funds saw an outflow of ₹505 crore.

“People will continue to stay invested in equity funds as that will give them inflation-beating returns. I would see money flowing across the schemes, but we expect to see an upward trend in small caps,” says NS Venkatesh, chief executive officer, AMFI.

“In 2020, and 2021, we saw steep corrections in small-cap funds. The value of small-cap stocks have fallen down by more than 50%. So now investors believe there is enough value in small-cap funds, and the advisors would also be advising them in that fashion. We expect this trend to continue for the next few months at least,” adds Venkatesh.

Meanwhile, inflows to Systematic Investment Plan (SIP) increased to a record ₹14,479 crore in May, up from ₹13,727 crore in April.

The benchmark Sensex index returned 3.04% in May. In April, inflows into equity mutual funds fell to ₹6,480, down 68% from March when it stood at ₹20,534. The flow into equity schemes were affected by the volatile markets in April.



Source: AMFI

Total assets under management (AUM) of the mutual fund industry was at ₹43.2 lakh crore, up from ₹41.61 lakh crore in April.