Equity Mutual Funds are witnessing positive momentum; Rs 18,529 crore inflow recorded in May

Equity mutual funds attracted a net amount of Rs 18,529 crore in May, tracking positive momentum for the 15th consecutive month amid heavy volatility in stock markets and continued selling by foreign portfolio investors (FPIs). This was much higher as compared to net inflows of Rs 15,890 crore in April, data from the Association of Mutual Funds in India (AMFI) showed on Thursday.

Equity schemes are witnessing net inflows since March 2021, highlighting the positive sentiment among investors. Earlier, such schemes had incurred losses of Rs 46,791 crore for eight consecutive months from July 2020 to February 2021. All equity-oriented categories received net inflows in May, with the Flexi Cap Fund category being the biggest beneficiary with a net inflow of Rs 2,939 crore.

Further, Large-cap, Large and Mid-cap Fund and Sectoral/Thematic Funds each saw net investments of over Rs 2,200 crore. “Even with high volatility in markets, uncertainty due to Ukraine-Russia war, supply chain disruption, high inflation and low economic growth projections, investors are opting for equity mutual funds,” said Gopal Kavalireddy, in FYERS said the head of research.

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Inflows through SIPs (Systematic Investment Plan) increased to Rs 12,286 crore in May from Rs 11,863 crore in April, indicating that retail investors continue to have confidence in equity investments. This is the ninth consecutive month of SIP inflows exceeding Rs 10,000 crore, a trend that began in September 2021 with an inflow of Rs 10,351 crore.

Apart from equities, the Gold Exchange Traded Fund (ETF) category saw an inflow of Rs 203 crore. On the other hand, the debt category saw a net outflow of Rs 32,722 crore in May after net inflow of Rs 69,883 crore in May. Overall, the mutual fund industry recorded a net outflow of Rs 7,532 crore last month as compared to a net inflow of Rs 72,846 crore in April.

“Mutual fund negative net inflows are the result of a rising interest rate cycle, in which investors redeem their investments from money markets and short-term funds,” he said. The total outflow dragged down the average assets under management (AUM). Industry grew to Rs 37.37 lakh crore at the end of May, from Rs 38.89 lakh crore at the end of April