Stock markets performed well in May 2025, but investors stayed away from equity mutual funds. This created a surprising situation for market experts. Equity mutual fund inflows dropped sharply by 21.66% in May 2025. The total amount fell to Rs 19,013 crore from Rs 24,253 crore in April 2025. This marked the lowest equity inflow in a year.
Meanwhile, the Sensex rose over 1.5% and Nifty 50 grew over 1.7% during May. Despite good market performance, investors remained cautious with their money. The Association of Mutual Funds in India (AMFI) released this data on Tuesday. The total mutual fund industry assets under management still reached a record Rs 72.2 lakh crore.
Akhil Chaturvedi from Motilal Oswal AMC explained the decline. "Equity net sales saw a sharp 22% drop largely due to higher redemptions by Rs 5,000 crore in May. The war-like situation at the beginning of the month made investors cautious," he told ANI. Global tensions and high stock valuations made investors think twice before investing in equity mutual funds.
Large-cap funds suffered the most with net inflows dropping 53.19% to Rs 1,250 crore from Rs 2,671 crore in April. Mid-cap funds declined 15.25% to Rs 2,808.7 crore from Rs 3,313 crore. Small-cap funds decreased 19.64% to Rs 3,214 crore from Rs 3,999.95 crore in April. This pattern shows investor concerns about elevated mid-cap and small-cap valuations.
Systematic Investment Plan contributions remained steady at Rs 26,688 crore compared to Rs 26,632 crore in April. This demonstrates continued retail investor confidence in systematic investments. "SIP numbers over Rs 26,000 crore is encouraging. Fresh investment preferred route has been SIP than lump-sum," Chaturvedi added.
Debt mutual funds recorded net outflows of Rs 15,908 crore, contrasting with Rs 2.19 lakh crore net inflow in April. Liquid funds saw outflows of Rs 40,205 crore and overnight funds Rs 8,120 crore. However, corporate bond funds attracted net inflows of Rs 11,983 crore and money market funds Rs 11,223 crore. Despite reduced equity and debt inflows, the mutual fund industry's overall AUM increased due to market appreciation and steady SIP contributions.