Key Points

This growth is largely attributable to market performance, as the Nifty and Sensex delivered strong returns through May.

The market momentum and SIP discipline continue to support AUM growth, said Amit Bivalkar, Founder Director at Sapient Finserv.

The AUM figures in May is a modest increase from April but a strong 12 per cent jump over May 2024.

“Open-ended schemes continue to dominate, making up 99.6 per cent of the total AUM, proving their lasting appeal to investors,” said Narender Singh, smallcase Manager and Founder of Growth Investing.

During the month, almost 11.3 lakh new folios were added, signifying increased interest among new set of investors in mutual funds.

Although the funds mobilized in May remained comparable to April levels, the sharp increase in redemptions from INR 32,479 crore to INR 37,591 crore indicates that many investors chose to capitalise on recent market gains by booking profits.

While the equity markets continued their upward momentum in May, gains were relatively subdued, potentially prompting investors to adopt a wait-and-watch approach.

“Among categories, flexicap funds led the charts with net inflows of Rs 3,841 crore, highlighting investor’s preference for funds that have the flexibility to invest across market segments, such that they benefit from the investment opportunity across large mid and small cap stocks by investing in one fund,” said Himanshu Srivastava, Associate Director- Manager Research, Morningstar Investment Research India.

Small-cap category was not far behind with net inflows of Rs 3,214 crore, maintaining its position among the top draw for investors.

This segment, despite its inherent volatility, continues to attract investor interest on the back of strong domestic sentiment and long-term return potential.

However, the pace of inflows into small-cap and mid-cap funds saw some cooling compared to April, indicating a cautious undertone amid market valuations and global uncertainties.

“Also, investors need to be wary of inherent risks that tag along with small and mid-cap segments while making investment decisions. They should align their investments in these segments in line with their risk appetite and overall asset allocation and avoid going overboard in them,” said Srivastava.

- IANS