Equity mutual funds achieved a remarkable milestone in May 2026, recording net inflows of ₹22,908 crore for the 63rd consecutive month, extending the industry's uninterrupted streak that began in March 2021. According to data released by the Association of Mutual Funds in India (Amfi) on Wednesday (June 10, 2026), this represents a significant decline from the previous month's performance but maintains the industry's remarkable run of positive equity inflows. The latest data reflects the growing maturity and resilience of Indian investors, with SIP inflows remaining a key growth driver at ₹30,954 crore during the month, marking the third consecutive month above the ₹30,000 crore level and underscoring continued retail investor confidence despite near-term market volatility. However, the gross inflows into equity schemes fell 40% month-on-month to ₹22,908 crore from ₹38,440 crore in April, while redemptions rose 9% to ₹34,696 crore, dragging net inflows to their lowest level in one year. As per The Times of India, geopolitical tensions in West Asia, rising crude oil prices and market volatility weighed on investor sentiment, with the moderation coming amid heightened uncertainty linked to the Iran-related conflict and its impact on global oil prices, which has triggered cautious positioning among investors. According to Bajaj Broking's Shashwat Singh, May 2026 witnessed a distinct cooling in mutual fund investment activity, with the fall being broad-based across large cap, midcap, and small cap segments, while flexi cap and sectoral thematic funds experienced even sharper contractions compared to April 2026.
The overall mutual fund industry experienced a net outflow of ₹64,021.17 crore in May against a net inflow of ₹3.22 lakh crore in April, primarily driven by withdrawals from debt-oriented schemes. As reported by Amfi, debt-oriented schemes witnessed a withdrawal of ₹96,949 crore during the month, with Liquid Funds seeing outflows of ₹29,680.94 crore, Money Market Funds recording withdrawals of ₹24,691.74 crore, and Overnight Funds also experiencing outflows of ₹15,524.77 crore. Consequently, the industry's Assets Under Management (AUM) dipped to ₹81.6 lakh crore at the end of May from ₹81.92 lakh crore a month earlier, with open-ended schemes accounting for ₹81.39 lakh crore of the total assets. Despite the overall decline, investor participation remained robust, with the total number of mutual fund folios increasing to 27.66 crore in May from 27.53 crore in April, indicating continued retail interest in mutual fund investments. AMFI Chief Executive Venkat Chalasani attributed the moderation to global uncertainty and commodity price volatility, with crude oil hovering near $100 a barrel and global uncertainty prompting investors to adopt a wait-and-watch approach, particularly in riskier equity segments. According to The Wealth Company MF's Umesh Sharma, the withdrawals were driven by tighter liquidity conditions, which pushed short-term yields higher.
Within the equity category, Flexi Cap funds garnered the highest net inflow of ₹5,176 crore during May, significantly declining from ₹10,148 crore in April, followed by Small Cap funds at ₹4,945 crore, Mid Cap funds at ₹4,385 crore, and Large Cap funds at ₹1,593 crore. All categories recorded lower inflows compared to April, with Small-cap, mid-cap and large-cap fund inflows declining between 28% and 37%, reflecting broad-based weakness across segments. According to Mirae Asset Investment Managers's Suranjana Borthakur, thematic and value/contra categories took the biggest hit as sentiment softened, while mid- and small-cap funds held their ground despite witnessing around a 30% decline in net inflows. These three categories together accounted for more than ₹14,500 crore, nearly two-thirds of total equity inflows during the month, indicating that investors are diversifying investments across categories and market capitalisations rather than concentrating on a single segment. Sectoral/thematic funds witnessed a sharp contraction with net inflows at ₹648 crore against ₹1,949 crore in April, as reported by Bajaj Broking's Shashwat Singh. Additionally, Gold ETFs recorded net outflows of ₹725 crore in May, reversing April's inflow of ₹3,040 crore, with Gold ETFs posting record outflows of ₹7.25 billion in May. Silver outflow increased to ₹2,733 crore from ₹127 crore in the previous month, as reported by The Hindu BusinessLine. Nehal Meshram, Senior Analyst at Morningstar Investment Research India, attributed the gold ETF outflows to profit-booking following the recent rally in gold prices and a shift in investor risk appetite away from safe-haven assets, noting that relatively attractive fixed-income yields may have increased the opportunity cost of holding gold.
SIP inflows remained a key growth driver, contributing ₹30,954 crore during the month, with SIP assets rising to ₹17.12 lakh crore and accounting for nearly 21% of the industry's total AUM. The number of contributing SIP accounts stood at 9.64 crore, demonstrating the growing reach and impact of systematic investment plans. According to Anand Rathi Wealth's joint CEO Feroze Azeez, SIP inflows in May 2026 were nearly 16% higher than the same period last year, clearly showing that Indian investors are becoming more disciplined and are looking at equities as a long-term wealth creation opportunity. However, as per Prabhudas Lilladher's Archit Doshi, the m-o-m decline in SIP contributions was marginal but marked a second consecutive drop, following a 3% decline in April, signalling a cause for concern. With flat to negative returns observed in several SIP vintages over the last one-two years, retail investors are increasingly viewing sustained allocations as a challenge, which is testing their long-term conviction. As per Wealthy.in's Aditya Agarwal, gross flows through SIPs also dipped marginally to ₹30,954 crore from ₹31,115 crore in April and ₹32,087 crore in March, with the number of contributing SIP accounts showing a marginal dip by about 84,000 to slightly above 9.6 crore. At this stage, it looks more like investors are pausing or delaying fresh equity allocations rather than making a clear move away from equities, according to Agarwal. Despite these challenges, A Balasubramanian, MD & CEO, Aditya Birla Sun Life AMC, said sustained SIP contributions reflect growing investor maturity and reinforce the importance of disciplined investing irrespective of short-term market fluctuations. Suranjana Borthakur, Head of Distribution at Mirae Asset Mutual Fund, said strong SIP numbers indicate that India's structural growth story remains intact and that retail investors continue to stay invested, while Gaurav Goyal, Chief Business Officer at Canara Robeco Asset Management, echoed that steady SIP contributions demonstrate investors' long-term commitment.
Despite the challenging market conditions, the mutual fund industry maintained strong fundamentals with AMFI Chief Executive Venkat Chalasani emphasising that the industry's growth continues to be supported by robust SIP inflows and India's strong economic fundamentals. The moderation in net inflows during May reflects a degree of geopolitical uncertainty and investor caution, as noted by Abakkus Mutual Fund's Vaibhav Chugh. The outflows seen in fixed income categories are indicative of liquidity management and corporate treasury requirements, rather than weakening demand. India's benchmark Nifty 50 index lost 1.9% in May, and is down 10.6% so far this year, contributing to the overall market volatility that has impacted investor sentiment. According to Wealthy.in's Aditya Agarwal, as markets turned extremely volatile in May, investors who typically deploy money through periodic lump-sum investments, may have paused fresh allocations, while seasoned investors also seem to be possibly looking for a better entry point or a sharper correction before deploying surplus cash. Looking ahead, Chugh said he remains cautiously optimistic on the industry's prospects, noting that while near-term uncertainties persist, the underlying fundamentals of investor participation and confidence in mutual funds remain strong. Balasubramanian added that as India's investment landscape evolves, investors are increasingly focused on remaining invested through market cycles and maintaining a long-term perspective.
