Equity Mutual Fund Inflows Decline 40% MoM In May, Lowest Since Start Of 2026

Amfi Data May 2026: Inflows into equity mutual fund schemes declined for the third straight month in May 2026, falling 40.40 per cent month-on-month to Rs 22,907.77 crore from Rs 38,440.20 crore in April, according to data released by the Association of Mutual Funds in India (Amfi).

The May figure was the lowest monthly inflow into equity mutual fund schemes so far in 2026, indicating a slowdown in investor inflows after stronger participation earlier in the year.

For context, equity-oriented mutual funds had attracted net inflows of Rs 24,028.59 crore in January and Rs 25,977.91 crore in February. Inflows then accelerated to Rs 40,450.26 crore in March before easing to Rs 38,440.20 crore in April and further declining in May.

The total assets under management (AUM) for equity funds grew 1.10 per cent m-o-m to Rs 35,74,352.13 crore in May.

"The moderation in net inflows during May reflects a degree of geopolitical uncertainty and investor caution; however, we view this as a phase of healthy consolidation rather than any reversal in sentiment. Having witnessed strong inflows in recent months, a cooling-off period is both natural and constructive for the market," said Vaibhav Chugh, CEO, Abakkus Mutual Fund.

Overall, the mutual fund industry recorded a net outflow of Rs 64,021.17 crore in May, largely due to heavy redemptions from debt schemes. As a result, the industry's total AUM shrunk marginally to Rs 81.58 lakh crore.

Venkat Chalasani, chief executive, Amfi, said the industry’s AUM remained largely stable in May, witnessing a marginal contraction amid ongoing global uncertainties and commodity price volatility. This marked the 63rd consecutive month of positive flows, he added.

Debt Funds See Net Outflows Of Rs 96,948 Crore

Debt mutual funds, on the other hand, saw net outflows of Rs 96,948.51 crore, a major reversal from the strong Rs 2,47,490.03 crore inflows seen in the previous month. The total AUM of the category slipped 4.65 per cent m-o-m to Rs 18,25,037.17 crore.

Within the category, liquid funds and money market funds saw the highest outflows in May at Rs 29,680.94 crore and Rs 24,691.74 crore, respectively. Overnight funds, corporate bond funds, and low duration funds came in next with outflows of Rs 15,524.77 crore, Rs 7,009.94 crore, and Rs 9,400.49 crore, respectively.

"The bulk of the redemptions came from liquid, money market, and overnight categories, instruments that move with corporate treasury cycles and tax payment schedules, not with investor sentiment. This is seasonal noise, not a structural retreat from fixed income," explained Nitin Agrawal, CEO, mutual funds, InCred Money.

Flexi-cap Funds Continue To Lead Equity MF Inflows

Among equity mutual fund categories, flexi-cap funds attracted the highest net inflows in May at Rs 5,175.54 crore. However, inflows into the category declined 49 per cent from Rs 10,147.85 crore recorded in April.

Agrawal said flexi-cap funds continue to attract investors because they give fund managers the flexibility to move across market segments at a time when leadership in the market is constantly changing.

"Flexi-cap's continued dominance is a structurally sound behaviour. In a market where cap-curve leadership is shifting and earnings delivery is being scrutinised across segments, mandates that give fund managers the freedom to navigate are proving consistently attractive. That is a lesson the retail investor base appears to have genuinely internalised," said Agrawal.

Small-Cap Funds Continue To Attract More Inflows Than Mid-Caps

Small-cap and mid-cap funds were the next most popular categories, receiving net inflows of Rs 4,945.57 crore and Rs 4,385.06 crore, respectively. Large-cap funds also remained in positive territory, attracting Rs 1,592.93 crore inflows during the month.

May marked the third straight month in which small-cap funds drew more inflows than mid-cap funds, extending a shift that began in March. Between August 2025 and February 2026, mid-cap funds had consistently attracted higher inflows than small-cap schemes.

"The small-cap overtaking mid-cap is worth noting. It likely reflects a combination of relative value recognition after a period of compression and some recovery-driven momentum," Agrawal said. Whether investors are being driven by attractive valuations or by momentum remains unclear, he said adding, "value-driven accumulation and momentum-driven chasing look identical in the flow data but have very different implications for investor outcomes," said Agrawal.

Multi-cap funds witnessed net inflows of Rs 2,291 crore, while sectoral and thematic funds received Rs 647.87 crore. Value and contra funds attracted Rs 509.57 crore, and focused funds saw inflows of Rs 647.87 crore.

Meanwhile, tax-saving equity-linked savings schemes (ELSS) and dividend yield funds recorded net inflows of Rs 650.78 crore and Rs 97.46 crore, respectively, in May.

Gold ETF Inflows Decline

Flows into Gold ETFs declined for the first time in 12 months in May. The month recorded net outflows of Rs 725.04 crore, as compared to Rs 3,040.31 crore inflows in the previous month.

Inflows into index funds also declined to Rs 943.26 crore from Rs 4,625.85 crore in the prior month.

Other ETFs also saw a reversal in trend, with Rs 620.22 crore outflows in May, as compared to Rs 10,754.86 crore inflows seen in April.

Overseas Funds See Lower Inflows Amid Regulatory Caps

Funds of funds (FoFs) investing in overseas markets attracted net inflows of Rs 763.99 crore in May, about 54 per cent lower than Rs 1,660.97 crore recorded in the previous month.

The moderation in flows in overseas FoFs comes as several fund houses continue to restrict fresh subscriptions in overseas schemes to remain within regulatory limits. The mutual fund industry is subject to an overall overseas investment cap of $7 billion for foreign equities, while individual asset management companies (AMCs) are also assigned separate investment limits.

With these limits largely exhausted amid strong investor interest in global markets over the past few years, many fund houses have either paused or curtailed fresh inflows into international funds to avoid breaching the prescribed thresholds.

SIP Assets Cross Rs 17 Lakh Crore Mark

Contributions through Systematic Investment Plans (SIPs) saw a marginal decline of 0.52 per cent m-o-m to Rs 30,954 crore from Rs 31,115 crore seen in April. May was the third consecutive month in which monthly SIP contributions stayed above the Rs 30,000-crore mark.

On a year-on-year (y-o-y) basis, SIP contributions increased 16 per cent from Rs 26,688 crore recorded in May 2025.

Meanwhile, SIP assets stood at Rs 17,12,126 crore at the end of May 2026, up from Rs 16,85,126 crore in the previous month. SIP assets accounted for nearly 21 per cent of the mutual fund industry's total AUM. The number of contributing SIP accounts rose to 96.41 million during the month, a marginal decline from the previous month.

Retail Participation Stays Resilient

AUM in retail-oriented schemes, comprising equity, hybrid and solution-oriented funds, rose to Rs 47.91 lakh crore from Rs 47.42 lakh crore in April. Retail folios under these categories increased to 211 million from 210 crore a month earlier.

At the industry level, the total number of mutual fund folios stood at 276.60 million at the end of May. The industry added a net 1.26 million folios during the month, reflecting continued expansion in the investor base despite a moderation in overall fund inflows.

The month also witnessed the launch of 13 new fund offers (NFOs), including six index funds, six exchange-traded funds (ETFs) under the "other ETFs" category, and one value/contra fund.