In May 2025, India’s mutual fund industry presented a mixed picture, reflecting shifting investor preferences and category-specific trends. As per the latest data from AMFI, net equity inflows for the month stood at ₹18,994.56 crore, showing a noticeable decline compared to ₹24,253 crore in April 2025. Despite the reduction in net inflows, the mutual fund industry’s total Assets Under Management (AUM) increased to ₹72.2 lakh crore in May from ₹70 lakh crore in April. This rise in AUM suggests that, while new investments into equities have slowed, the broader investor interest in mutual funds remains strong.
A closer look at the category-wise fund inflows reveals interesting shifts. Large Cap Funds saw a sharp drop in inflows, falling to ₹1,250.50 crore in May from ₹2,671.46 crore in April. This 53% decline indicates that investors may be reallocating from large caps toward other segments or waiting for more clarity on market direction. Similarly, Small Cap Funds saw inflows of ₹3,214 crore in May, down from ₹3,999.95 crore the previous month, while Midcap Funds recorded an inflow of ₹2,808.7 crore in May compared to ₹3,313 crore in April. These declines across the three major equity categories show a broad-based softening of investor appetite in equity funds.
Debt-oriented funds, however, experienced a different trend. Corporate Bond Funds witnessed a dramatic surge in inflows, jumping to ₹11,983.3 crore in May from ₹3,458.42 crore in April. This sharp rise of over 246% signals a strong investor shift toward relatively safer, fixed-income instruments amid possible market volatility or interest rate considerations. Similarly, New Fund Offer (NFO) inflows skyrocketed in May, reaching ₹4,170 crore, compared to just ₹350 crore in April. This surge points to growing investor interest in newly launched schemes and innovative investment themes offered by fund houses.
Credit Risk Funds, on the other hand, continued to see net outflows. In May, outflows stood at ₹248 crore, slightly better than April’s outflows of ₹301.7 crore. While the trend remains negative, the reduced pace suggests a slight improvement in investor sentiment toward this high-risk category. Another notable development came from ELSS (Equity Linked Savings Scheme) funds, which attracted ₹678 crore in May, significantly higher than the ₹372 crore inflow in April. This nearly 82% jump may reflect the beginning of early tax planning by investors under Section 80C of the Income Tax Act.
The month-on-month decline in overall equity inflows has not dampened the industry’s overall performance, thanks to strong showings from debt funds and new fund offers. While traditional equity segments like large caps, midcaps, and small caps witnessed reduced inflows, the industry’s ability to attract nearly ₹19,000 crore in net equity and over ₹12,000 crore in corporate bond flows underlines the maturity and adaptability of mutual fund investors.
In conclusion, May 2025 demonstrated a shift in momentum within the mutual fund space. Equity flows may have slowed, but the significant rise in debt fund inflows and NFO collections compensated for the shortfall. The increase in AUM to ₹72.2 lakh crore from ₹70 lakh crore further reinforces the sector’s resilience. As investors diversify across asset classes and strategies, the Indian mutual fund industry continues to grow stronger and more dynamic in its appeal.
Disclaimer:
This article is for informational purposes only and should not be construed as financial advice. Investment in mutual funds is subject to market risks. Please read all scheme-related documents carefully before investing. Past performance is not indicative of future results. Consult a certified financial advisor for personalized guidance.
