May equity MF inflows surge 83% despite poll volatility

Equity investments into mutual funds surged 83.4% in May to a record high of Rs 34,697 crore despite volatility from the general elections, marking the 39th consecutive month of inflows, according to data from the Association of Mutual Funds in India (Amfi).

This growth was largely driven by significant inflows into new fund offers (NFOs) and continuous investments in mid-cap and small-cap funds. Notably, the HDFC Mutual Fund’s thematic NFO – HDFC Manufacturing Fund – garnered over Rs 9,500 crore during the month, primarily contributing to the surge in net inflows into equity mutual funds.

Systematic Investment Plans (SIPs) also reached a new record with inflows hitting Rs 20,904 crore in May, indicating that retail investors remained committed to equities despite market volatility. Inflows into equity funds across large-cap, mid-cap, and small-cap categories increased in May compared to April.

Small-cap funds saw the highest inflows at Rs 2,725 crore, up 23.4% from April. Mid-cap funds saw inflows rise by 45.3% to Rs 2,606 crore, while large-cap funds experienced an 85.4% jump to Rs 663 crore.

“This demonstrates the maturity of Indian retail investors and their confidence in India’s long-term growth story, even amidst the general elections. With the continuation of the existing political regime and policies, alongside strong corporate earnings, we anticipate sustained strong flows from domestic mutual fund investors,” said Madhu Nair, CEO of Union Mutual Fund.

Overall, the net assets under management (AUM) of the Indian mutual fund industry grew by 2.8% from April to Rs 58.6 trillion as of May 31. Of this, the AUM of open-ended equity funds was Rs 25.4 trillion.

SIP contributions to the AUM also hit a record high of Rs 11.5 trillion, with inflows reaching an all-time high of Rs 20,904.4 crore in May. The number of mutual fund folios also stood at a record high of 186 million, with 88 million being SIP accounts.

Venkat Chalasani, CEO of Amfi, stated that the overall outlook for Indian capital markets remains positive, supported by strong fundamentals and favorable demographics. “Political stability fosters sustainable economic growth, attracting investments and encouraging long-term investments. Global growth is maintaining its momentum in 2024, likely remaining resilient, bolstered by a rebound in global trade,” he said.

Sectoral and thematic funds continued to see the highest inflows within equity fund categories. In May, this category saw net inflows of Rs 19,213.4 crore, driven by sustained investor interest and the launch of an NFO. Akhil Chaturvedi, Executive Director & Chief Business Officer of Motilal Oswal AMC, noted that this reflects strong investor confidence in the potential of sector-specific growth and smaller companies.

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