MF investors keep faith in equity, invest Rs 34k cr in May

Mutual fund investors committed record funds to equities in May, looking beyond the event risk posed by the election outcome, as several new fund offers (NFO) of sectoral funds hit the market to eventually draw ₹34,697 crore to the category.

By comparison, investors had put in ₹18,917 crore in April. Monthly gross flows through systematic investment plans (SIPs) rose to a new high of ₹20,904 crore - higher than April's ₹20,371 crore.

Debt funds, too, saw inflows of ₹42,295 crore as corporates allocated to liquid and money market funds, taking advantage of the higher rates compared to bank deposits.


Total average assets under management of the industry moved to a new high of ₹58.59 lakh crore, up from the previous month's ₹57.01 lakh crore.

"Despite potential high volatility from FII selling, ongoing general elections, GDP data, and other minor events in May, investors remained steadfast in their pursuit of returns on the back of the Indian growth narrative, buoyed by confidence in the incumbent government securing a record third consecutive term," said Gopal Kavalireddi, vice president, research at FYERS.

"Investors sitting on the sidelines deployed cash as they believed the market would rally after the elections," said Anand Vardarajan, chief business officer, Tata Mutual Fund.

Investors poured in a record ₹19,213 crore into sectoral funds, led by close to ₹9,500 crore in HDFC Manufacturing Fund.