Witnessing positive momentum for the 15th straight month, equity mutual funds attracted a net sum of Rs 18,529 crore in May amid heightened volatility in stock markets and consistent selling by Foreign Portfolio Investors (FPIs).
This was much higher compared to a net inflow of Rs 15,890 crore in April, data from the Association of Mutual Funds in India (AMFI) showed on Thursday.
Equity schemes have been witnessing net inflow since March 2021, highlighting the positive sentiment among investors.
Prior to this, such schemes had consistently witnessed outflows for eight months from July 2020 to February 2021 losing Rs 46,791 crore.
All the equity-oriented categories received net inflows in May with flexi cap funds category being the biggest beneficiary with a net inflow of Rs 2,939 crore.
Besides, large-cap, large & mid-cap fund and sectoral/thematic funds witnessed over Rs 2,200 crore net infusion each.
"Even with markets facing high volatility, uncertainty due to the Ukraine-Russia war, supply chain disruptions, high inflation and lower economic growth projections, investors are opting for equity mutual funds," Gopal Kavalireddi, Head of Research at FYERS, said.
Inflow through SIP (Systematic Investment Plan) rose to Rs 12,286 crore in May from Rs 11,863 crore in April, indicating that retail investors continue to hold confidence on equity investments. This is the ninth consecutive month of SIP inflow being greater than Rs 10,000 crore, a trend which started in September 2021 with Rs.10,351 crore inflow.
Apart from equity, gold exchange traded funds (ETFs) 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 witnessing a net inflow of Rs 69,883 crore in the preceding month.
Overall, the mutual fund industry registered a net withdrawal of Rs 7,532 crore last month as compared to a net inflow of Rs 72,846 crore in April.
"Mutual fund negative net flow is an outcome of the rising interest rate cycle, with investors redeeming their investments from money market and low to short-duration funds," he added.
The overall outflow pulled down the average assets under management (AUM) of the industry to Rs 37.37 lakh crore at the end of May from Rs 38.89 lakh crore at April-end.