In a surprising turn amid bullish markets, equity mutual fund inflows plunged by 22% in May to ₹19,013 crore, marking their lowest level in over a year and the fifth straight month of decline. The drop comes despite benchmark indices posting strong returns, with the Sensex up 1.51% and Nifty50 gaining 1.71% during the month.
🔻 Large-Cap Equity Mutual funds bear the Brunt
The large-cap category saw the most dramatic drop, witnessing a 53% fall in inflows to just ₹1,250 crore, compared to ₹2,671 crore in April. Mid-cap and small-cap funds also cooled down, falling 15% and 20%, respectively, indicating growing investor caution amid high valuations and global headwinds.
📊 Flexi-Cap and Thematic equity mutual funds Buck the Trend
- Flexi-cap funds led the pack with inflows of ₹3,841 crore.
- Small-cap funds followed at ₹3,214 crore.
- Thematic and sectoral funds showed resilience, growing marginally to ₹2,052 crore, driven by rising interest in infrastructure, tech, and ESG themes.
💸 Debt Funds Hit by ₹15,908 Cr Outflow
Debt mutual funds reversed their positive April momentum with ₹15,908 crore in outflows in May. The sharpest exit came from liquid funds, which saw ₹40,205 crore worth of redemptions. Analysts attribute this to profit booking and short-term cash requirements from institutional investors.
🧠 Investor Strategy Shifting to Hybrid Schemes
While equity mutual funds and debt saw exits, hybrid funds witnessed a 46% jump, suggesting a rotation toward balanced allocation strategies in uncertain markets. With hybrid and dynamic asset allocation funds gaining traction, investors appear to be hedging equity risks while staying invested.
💬 Expert Take
“The continued decline in equity mutual fund inflows, despite a rising market, points to valuation concerns and global instability weighing on retail sentiment,” said , Senior Analyst . “We expect inflows to recover if interest rates soften and volatility stabilizes post-election cycles.”
📌 Key Figures at a Glance
| Fund Category | Inflows (May 2025) | Change vs April |
|---|---|---|
| Equity MF Total | ₹19,013 Cr | ↓ 22% |
| Large Cap | ₹1,250 Cr | ↓ 53% |
| Mid Cap | ₹2,622 Cr | ↓ 15% |
| Small Cap | ₹3,214 Cr | ↓ 20% |
| Flexi Cap | ₹3,841 Cr | ↑ |
| Thematic/Sectoral | ₹2,052 Cr | ↑ |
| Debt MF Total | ₹(-15,908) Cr | ← Shift from ₹2.19 L Cr inflow |
| Liquid Funds | ₹(-40,205) Cr | ↓ Sharp outflow |
#MutualFundMayhem #EquityExit2025 #SmartMoneyMoves
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