Summary:
India's mutual fund industry reported a net outflow of ₹64,021 crore in May 2026, reversing April's strong inflows. The decline was largely driven by significant redemptions from debt funds, particularly liquid and overnight schemes. Despite slower momentum, equity funds continued to attract investments, led by flexi-cap, small-cap and mid-cap categories.
A sharp turnaround was experienced within the mutual fund industry in May 2026 due to strong redemptions from debt schemes, leading to a net outflow for the industry. The data from AMFI shows that mutual fund investors pulled out Rs 64,021.17 crore in May against a net inflow of Rs 322,402.98 crore recorded in April, marking a MoM fall of 119.9%.
While equity, hybrid, and passive funds attracted investments, debt funds saw their outflows grow substantially.
Debt Funds Lead the Decline
However, debt schemes experienced the highest percentage change, turning from net inflows worth ₹24,749.03 crore during April to outflows worth ₹96,948.51 crore in May due to a 139.2% MoM fall.
This fall was mainly attributed to short-term and liquid-oriented categories, where liquid funds changed their trend from net inflows of ₹165,104.67 crore in April to outflows worth ₹29,680.94 crore in May, leading to an 118% decrease. In addition, overnight funds decreased by 149.4%, money market funds declined by 219.6%, low duration funds by 232.5%, corporate bond funds by 213.1%, and short duration funds by 199.2%.
The decline percentage among all debt schemes was highest for floater funds at 2,189.6%, although they were based on a comparatively lower volume basis. This analysis implies that most outflows of debt funds are attributed to institutional and treasury monies withdrawing from short-term schemes.
Equity Inflows Remain Positive Despite Slowing Momentum
In addition, equity-focused plans kept on fetching investments, but the inflow had reduced considerably. The category fetched a total amount of ₹22,907.77 crore in May, compared to ₹38,440.20 crore in April, representing a 40.4% MoM decline.
Among all types of categories in equity funds, Flexi-cap funds continued their leading contribution with a total inflow of ₹5,175.54 crore, down 49.0% compared to April. The second-highest inflow was recorded by small-cap funds at ₹4,945.57 crore, down 28.2% compared to April, followed by mid-cap funds with an inflow of ₹4,385.06 crore, a decrease of 33.1%.
The large & mid-cap funds category had collected ₹3,278.22 crore, a fall of 27.0% compared to April, whereas large-cap funds witnessed a fall in inflow by 36.9% to ₹1,592.93 crore. The multi-cap funds category had fetched ₹2,291.01 crore, a reduction of 39.8% compared to April.
Sectoral and thematic funds' inflow witnessed a massive decline of 66.8% to ₹647.87 crore, whereas the value and contra funds had recorded an inflow of ₹509.57 crore, a
Hybrid and Solution-Orientated Funds Slow Down
The hybrid category stayed positive as well with net flows worth ₹10,560.24 crore, but this was down by 48.7% from ₹20,565.24 crore in April. The leading fund type within this group was arbitrage funds with net flows worth ₹5,697.90 crore, which fell by 54.0%, followed by multi-asset allocation with ₹3,928.51 crore, a 23.2% drop.
For balanced hybrid funds, the fall in net inflows was 56.0%. Dynamic asset allocation and balanced advantage saw net flows fall by 89.8%, while conservative hybrid and equity savings had better numbers since their net flows turned positive.
As for solution-oriented funds, net flows were steady at ₹270.36 crore against ₹306.98 crore in April, showing a decrease of 11.9%. Retirement funds raised ₹67.85 crore, while children’s funds got ₹
Passive Funds Lose Momentum
Other schemes, including ETFs, index funds, and overseas fund of funds, saw inflows plunge to ₹361.99 crore from ₹20,082.00 crore in April, a decline of 98.2%.
Index funds remained positive with inflows of ₹943.26 crore, though down 79.6%. Gold ETFs slipped into outflows, resulting in a 123.8% decline, while other ETFs recorded a 105.8% fall. Overseas fund of funds attracted ₹763.99 crore, down 54.0%.
Domestic fund of funds also witnessed a slowdown, with inflows falling 68.6% to ₹957.45 crore from ₹3,048.87 crore in April.
Overall Outlook
In AMFI's May 2026 data, it is clear that the net outflows in the industry were caused mainly by the turnaround seen in debt fund outflows. Equities have held up well, with equities seeing net inflows of ₹22,907.77 crore, with flexi-cap, small-cap, and mid-cap leading the way. Hybrid schemes continued to see net inflows, but solution funds were relatively stable. However, the general moderation witnessed in equities, hybrids, and passive funds shows that allocations to new funds slowed down significantly last month.
