Equity mutual fund inflows decline in May 2023; SIPs touch record high

Net inflows in equity mutual funds in May 2023 were recorded at Rs 3,240 crore, reported PTI citing recent data from the Association of Mutual Funds in India (AMFI). This figure represents a decline from the Rs 6,480 crore inflows observed in the previous month.

However, investments through the Systematic Investment Plan (SIP) route reached a record high of Rs 14,749 crore in May, compared to Rs 13,728 crore in April. The popularity of SIPs continues to grow as investors opt for disciplined and regular investments in mutual funds.

In terms of specific categories, smallcap mutual funds experienced increased inflows of Rs 3,283 crore in May, up from Rs 2,182 crore in April. Similarly, midcap funds witnessed an inflow of Rs 1,196 crore, compared to Rs 1,791 crore in the previous month. Dividend yield funds also saw inflows of Rs 289 crore. However, large-cap funds registered an outflow of Rs 1,362 crore, and Equity Linked Saving Schemes (ELSS) witnessed outflows of Rs 505 crore.

Market analysts attribute the decline in equity inflows to investors opting for profit booking during the month. They suggest that rising markets, coupled with potential expenses related to vacations and education, may have contributed to lower investments in mutual funds in May. Manish Mehta, National Head and Sales, Marketing & Digital Business at Kotak Mahindra Asset Management Company, expressed this sentiment.

Debt funds, on the other hand, experienced lower inflows at Rs 45,959 crore in May, compared to Rs 1.06 lakh crore in April. Within the debt segment, short-term liquid funds witnessed net inflows of Rs 45,234 crore, while overnight funds experienced outflows of Rs 18,910 crore. Hybrid funds saw increased inflows of Rs 6,093 crore, with arbitrage funds leading the way with net buying worth Rs 6,639.64 crore. However, balanced hybrid/aggressive hybrid funds faced outflows of Rs 996.78 crore in May.

Overall, the total asset under management (AUM) of the mutual fund industry in May 2023 rose to Rs 43.20 lakh crore from Rs 41.61 lakh crore in April, indicating a positive growth trend in the sector.