Inflows in equity mutual funds halve to Rs 3,240 crore in May on profit booking

Inflows in equity mutual funds halved to Rs 3,240 crore in May, declining for the second consecutive month, primarily due to profit booking by investors amid a rising market.

However, this was also the 27th consecutive month of inflow in the equity class, which was primarily driven by fund infusion in small-cap and mid-cap categories, data released by the Association of Mutual Funds in India (Amfi) showed on Friday.

Overall, the 42-player mutual fund industry continues to see inflow and has attracted Rs 57,420 crore, on contributions from debt-oriented schemes. This comes following a net investment of Rs 1.21 lakh crore in the preceding month.

Debt funds saw a net infusion of nearly Rs 46,000 crore, which was more than halved from the Rs 1.06 lakh crore inflow seen in April.

The inflow led to the asset under management of the industry accelerating to Rs 43.2 lakh crore as of May-end from Rs 41.62 lakh crore at the end of April.

Going by the data, equity mutual funds attracted Rs 3,240 crore in May, much lower than the Rs 6,480 crore seen in April. In March, such funds saw a net infusion of Rs 20,534 crore.

"Profit booking in a rising market, along with probable expenses towards vacation and education, could have led to lower investments in mutual funds in May," Manish Mehta, National Head of Sales, Marketing, and Digital Business at Kotak Mahindra Asset Management Company said.

Within the equity segment, investors continued to repose faith in small-cap funds, with a 50 per cent jump in net flows to Rs 3,282 crore. The valuation difference in comparison to large-cap stocks continues to play out well for investors opting for mid- and small-cap funds since the beginning of the calendar year, Gopal Kavalireddi, Vice President of Research at FYERS, said.

Further, SIP (Systematic Investment Plan) inflows are back above the Rs 14,000 crore mark after a brief dip to Rs 13,728 crore in April, with investors continuing their disciplined investing that started more than two years ago, he added.

In the debt segment, inflows were driven by liquid funds, ultra-short duration, money market, and short-duration categories.

Only the hybrid category saw net flows rise by 84 per cent to Rs 6,093 crore, primarily due to the change in tax regulations and higher-than-usual inflows into arbitrage funds.

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