Low equity mutual fund redemptions in May could be a sign of rising investor confidence

ET Intelligence Group: Mutual fund redemptions fell in May even as the market remained volatile, an indication that investors remained optimistic about equities despite a 10% plunge from the record highs.

Equity MFs saw redemptions fall to ₹13,089 crore in May, the lowest in the past 25 months, showed data from the Association of Mutual Funds in India (AMFI). This pushed the gross buy-to-sell ratio of equity MFs to 2.42 times in May, compared with the long-term average of 1.48. It is the second-highest reading since data became available with the AMFI.

The net inflow of equity MFs of ₹18,529 crore in May was primarily driven by lower redemptions as the gross inflow of ₹31,619 crore was the lowest in six months. Large-cap equity funds, the largest fund category in terms of assets under management (AUM), saw gross sales of ₹1,936 crore, the lowest since May 2020, followed by equity-linked savings schemes (ELSS) funds, where redemptions dropped to the July 2020 level. Multi-cap funds saw gross redemptions of ₹433 crore in May propelled the gross buy-to-sell ratio to 3.92, the highest among all categories.