New Delhi | Equity mutual funds recorded a net inflow of Rs 22,908 crore in May, the lowest in a year, as market volatility amid the West Asia crisis and high crude oil prices weighed on investor sentiment and led to lower allocations to the asset class.
The inflow declined 40 per cent from the Rs 38,440 crore recorded in April,according to data released by the Association of Mutual Funds in India (Amfi) on Wednesday.
Moreover, Monthly SIP contributions declined marginally to Rs 30,954 crore in May from Rs 31,115 crore in April, extending the moderation seen after inflows had fallen from Rs 32,087 crore in March.
Despite the sequential decline, Systematic Investment Plans (SIPs) remained a key pillar of the mutual fund industry, with SIP assets under management (AUM) rising to Rs 17.12 lakh crore in May, accounting for nearly 21 per cent of the industry's total AUM.
Overall, the mutual fund industry reported a net outflow of over Rs 64,000 crore in May against a net inflow of Rs 3.22 lakh crore in April, primarily due to a withdrawal of Rs 96,948 crore from debt-oriented schemes.
Consequently, the industry's Assets Under Management (AUM) dipped to Rs 81.6 lakh crore at the end of May from Rs 81.92 lakh crore a month earlier.
Venkat Chalasani, Chief Executive, AMFI, attributed the marginal contraction in the industry's AUM to ongoing global uncertainties and commodity price volatility.
According to the data, net inflows into equity schemes stood at Rs 22,908 crore in May, compared with Rs 38,440 crore in April, Rs 40,450 crore in March, Rs 25,978 crore in February and Rs 24,028 crore in January.
The latest inflow was the lowest since May 2025, when equity mutual funds had attracted a net inflow of Rs 19,013 crore.
"The moderation in equity mutual fund inflows reflects a more cautious investor sentiment amid heightened geopolitical uncertainty and increased market volatility," Ankur Punj, MD & Business Head at Equirus Wealth, said.
Concerns over global developments, particularly tensions in the Middle East and fluctuating crude oil prices, have led many investors to adopt a wait-and-watch approach rather than make fresh allocations, he added.
In addition, elevated valuations in certain pockets of the market, particularly within the broader market segments, may have also prompted some investors to adopt a more measured approach, Himanshu Srivastava, Principal, Manager Research, Morningstar Investment Research India, said.
From a net-flow perspective, investors seem to be holding on or pausing until greater clarity emerges. Investors continue to face several headwinds, with the war (Iran, Israel and US) not yet abating, oil prices remaining high, and inflation continuing to be an important factor that investors are considering, Santosh Joseph, CEO of Germinate Investor Services, said.
Within the equity category, Flexi Cap funds garnered the highest net inflow of Rs 5,175 crore during the month, followed by Small Cap funds at Rs 4,945 crore and Mid Cap funds at Rs 4,385 crore. Large Cap funds received a comparatively lower inflow of Rs 1,593 crore. Although all the four categories witnessed lower inflows compared with April.
On the other hand, Dividend Yield Funds and Equity Linked Savings Schemes (ELSS) witnessed net outflows during the month.
Meanwhile, Gold Exchange Traded Funds (ETFs) recorded a net outflow of Rs 725 crore in May, against an inflow of Rs 3,040 crore in April, indicating a moderation in investor appetite for the asset class. This also marks the first instance of outflows in 2026.
The outflow could be driven by a combination of profit booking following the earlier rally in gold prices and a shift in investor risk appetite, with some rotation away from safe-haven assets, Nehal Meshram, Senior Analyst, Morningstar Investment Research India, said.
Debt-oriented mutual fund categories witnessed a sharp reversal in May with net outflows of Rs 96,949 crore, following the strong inflows of Rs 2.5 lakh crore seen in April.
"The decline reflects a re-normalisation after the post–fiscal year-end liquidity surge, as institutional and corporate treasuries pared back positions in short-term parking avenues," Meshram added.
The outflows concentrated heavily in liquidity and short-term treasury-oriented segments. Liquid Funds saw the largest outflows of Rs 29,681 crore, followed by Money Market Funds with outflows of Rs 24,692 crore and Overnight Funds at Rs 15,525 crore.
