In May, equity mutual fund inflows cooled off as higher market volatility and geopolitical uncertainty weighed on investor sentiment. As per the Association of Mutual Funds in India (AMFI), net inflows into equity schemes fell 40% month-on-month to Rs. 22,907 crore in May, from Rs. 38,440 crore in April.
Despite the drop, equity mutual funds attracted net positive flows for another consecutive month. Year-on-year inflows were up around 20%, from Rs. 19,013 crore in May 2025.
The moderation in flows was visible across most equity fund categories. Large-cap funds attracted Rs. 1,592.93 crore in May, down 37% from Rs. 2,524.6 crore in April. Mid-cap funds saw inflows decline 33% to Rs. 4,385.06 crore from Rs. 6,551.4 crore in the previous month.
Small-cap funds remained the preferred category among investors, although inflows slipped 28% to Rs. 4,945.57 crore from Rs. 6,885.9 crore in April.
"The lower inflows are due to extreme volatility in the markets as crude hovers around $100 a barrel, which has prompted near-term caution among investors," said Venkat Chalasani, Chief Executive of AMFI.
India's mutual fund industry's total assets under management (AUM) also witnessed a marginal decline during the month.
According to AMFI data, industry AUM stood at Rs. 81.58 lakh crore at the end of May, compared to Rs. 81.92 lakh crore recorded in April, reflecting the impact of market fluctuations and weaker inflows across asset classes.
On the other hand, debt mutual funds flipped direction in May with net outflows of Rs. 96,948 crore, against inflows of Rs. 2.47 lakh crore in April.
Liquid funds took the biggest hit, with outflows of Rs. 29,680 crore, and money market funds followed closely with withdrawals of Rs. 24,691.74 crore. Corporate bond funds also saw net outflows of Rs. 7,009.94 crore, reversing April’s inflows of Rs. 6,196.5 crore.
Credit risk funds were the only debt category that stayed in the green, pulling in Rs. 49.5 crore during the month.
Hybrid mutual funds witnessed net inflows of Rs. 10,560.24 crore in May, a 49% drop, compared with Rs. 20,565.2 crore in April.
Within the segment, arbitrage funds led with inflows of Rs. 5,697 crore, while multi-asset allocation funds brought in Rs. 3,928 crore. Balanced hybrid funds collected Rs. 655.24 crore, and dynamic asset allocation funds recorded inflows of Rs. 181 crore.
Combined inflows into index funds, gold ETFs and other ETFs declined 98% to Rs. 361.99 crore from Rs. 20,082 crore in April. In the same time, gold ETFs recorded outflows worth Rs. 725.04 crore, and the other ETFs saw net withdrawals of Rs. 620.22 crore.
However, index funds continued to attract investor interest with inflows of Rs. 943.26 crore. Funds of funds investing overseas also recorded net inflows of Rs. 763.99 crore during the month.