Equity mutual funds surge to historic Rs 34,697 crore inflows in May

Unperturbed by election uncertainty, investors poured record sums into equity mutual fund (MF) schemes in May, driving India closer to a $5 trillion market capitalisation.

The Rs 34,697 crore net inflows into actively managed equity funds last month surpassed the previous high of Rs 28,463 crore recorded in March 2022.

In April 2024, equity schemes had garnered nearly Rs 19,000 crore.

The near twofold month-on-month jump in May was underpinned by robust collections from the HDFC Manufacturing Fund’s new fund offering (NFO) and sustained inflows through systematic investment plans (SIPs).

“Record inflows were aided by NFO listings and investors taking advantage of volatility to add equity schemes to their portfolios through SIPs as well as lump sums,” said Manish Mehta, national head, sales, marketing, and digital business, Kotak Mahindra Asset Management Company.

Despite heightened volatility, the benchmark National Stock Exchange Nifty ended May with a 0.3 per cent decline, snapping its three-month gaining streak.

The Nifty Smallcap 100 fell by 2 per cent, while the Nifty Midcap 100 managed a 1.6 per cent gain.

HDFC MF’s NFO amassed Rs 9,563 crore, marking the second-highest collection for an equity fund and the third-highest overall for an NFO.

SBI MF’s balanced advantage fund holds the record for the highest NFO collection at Rs 14,551 crore, followed by ICICI Prudential MF’s Rs 9,808 crore flexicap fund NFO.

Gross inflows through the SIP route surged to a new high of Rs 20,904 crore in May, up from Rs 20,371 crore in April.

Net SIP inflows stood at Rs 9,226 crore.

The record net inflows pushed the assets under management (AUM) of equity schemes past the Rs 25 trillion mark, said Venkat Chalasani, chief executive of the Association of Mutual Funds in India (Amfi).

“Political stability fosters sustainable economic growth, attracting investments and encouraging long-term commitments.

"Global growth is maintaining its momentum in 2024 and is likely to remain resilient, supported by a rebound in global trade.

"The overall outlook for Indian capital markets remains positive, backed by strong fundamentals and favourable demographics,” he added.

Robust inflows into equity MF schemes have provided strong support for the equity market.

MFs’ equity buying reached a record Rs 46,666 crore in May 2024, more than offsetting the Rs 22,159 crore selling by foreign portfolio investors.

The strong momentum in inflows extended to shorter-horizon debt funds, hybrid funds, and passive funds as well.

Debt funds collectively garnered a net inflow of Rs 42,295 crore, hybrid funds received Rs 17,991 crore, and passive funds saw a net inflow of Rs 15,655 crore, according to the latest data released by Amfi.

Overall, the MF industry recorded a net inflow of Rs 1.1 trillion last month.

The influx of fresh investments, along with some mark-to-market gains, led to a 2.8 per cent rise in total AUM to Rs 58.9 trillion.