Equity mutual fund inflow swells to Rs 34,697 cr in May; SIP at new high of Rs 20,904 cr

New Delhi: Equity mutual funds witnessed a staggering growth with inflow reaching a record high of Rs 34,697 crore in May, marking a 83 per cent surge from the preceding month, propelled by contributions from thematic funds and intermittent corrections that provided buying opportunity to investors.

This also marks the 39th consecutive month of net inflows in equity funds, data with the Association of Mutual Funds in India (AMFI) showed on Monday.

Moreover, monthly contributions from Systematic Investment Plan (SIP) rose to Rs 20,904 crore in May, from Rs 20,371 crore in April, marking the second consecutive month of inflows exceeding Rs 20,000 crore.

Overall, the mutual fund industry has witnessed an inflow of Rs 1.1 lakh crore in the month under review as compared to Rs 2.4 lakh crore in April. The inflow was due to investment in equity as well as debt schemes.

With these inflows, the industry's net assets under management rose to Rs 58.91 lakh crore in May-end from Rs 57.26 lakh crore in April-end.

As per the data, equity-oriented schemes witnessed an inflow of Rs 34,697 crore in May, way higher than Rs 18,917 crore in April.

Except for the focused and equity-linked saving schemes (ELSS) categories, all the other categories witnessed good net inflows.

Sector/thematic funds continue to attract investor attention with the highest net inflows of Rs 19,213 crores during the month. This was largely owing to the new fund offering (NFO) of the HDFC Manufacturing Fund, which collected around Rs 9,563 crore.

"Intermittent corrections provided investors some buying opportunity in a market which has largely witnessed a secular uptrend for a long time now. Moreover, the expectation of the NDA-led government coming back to power also propelled buying from investors, as they would have expected the markets to rally further if the NDA government is indeed formed," Himanshu Srivastava, Associate Director - Manager Research, Morningstar Investment Research India, said.

Manish Mehta, National Head - Sales, Marketing & Digital Business at Kotak Mahindra AMC, said that record inflows were aided by NFO listings and investors taking advantage of volatility to add equity schemes to their investments through SIPs as well as lumpsum.

"The record inflow in May came despite high volatility from FPI selling and general elections. Investors remained steadfast in their pursuit of returns on the back of the Indian growth narrative, buoyed by confidence in the incumbent government securing a record third consecutive term, Gopal Kavalireddi, Vice President of Research at FYERS, said. Apart from equities, debt category schemes experienced net inflows of Rs 42,495 crore on preference for safety which drove the flow in the segment. Liquid funds recorded inflows of Rs 25,873.38 crore.

"Given the uncertainty surrounding the interest rate cycle, most of the flows have flowed into categories having a duration profile of less than a year such as ultrashort and money market. Significant flows have also been received by overnight and liquid fund categories, but that is largely corporates and institution driven and usually of very short tenure," Srivastava said.

The categories which witnessed net outflows are short duration, medium duration, dynamic bond, credit risk, gilt fund and floater fund. Besides, hybrid category schemes attracted Rs 17,991 crore and index funds and other ETFs collectively garnered Rs 15,180 crore.