SIP Investments Remain Strong Amid Market Fluctuations
SIP Contributions Show Resilience
In May, mutual fund investors maintained their trust in systematic investment plans (SIPs), despite a general decline in fund inflows. For the third consecutive month, SIP contributions exceeded Rs 30,000 crore, highlighting the strength of long-term retail engagement in the market. According to data from the Association of Mutual Funds in India, SIP inflows reached Rs 30,954 crore in May, a slight decrease from Rs 31,115 crore in April, marking a minimal month-on-month drop of about 1%. However, this figure represents a robust 16% increase compared to Rs 26,688 crore in the same month last year.
While SIP contributions remained steady, overall investments in equity mutual funds saw a significant decline. Net inflows into equity-oriented schemes fell to Rs 22,907 crore in May, nearly 40% lower than the Rs 38,440 crore recorded in April. Nevertheless, equity funds still attracted more investor interest compared to a year prior, with net inflows 20% higher than the Rs 19,013 crore noted in May 2025.
In contrast, debt mutual funds faced a notable shift in investor behavior, reporting net outflows of Rs 96,948 crore in May, a stark difference from the inflows of Rs 2.47 lakh crore seen in April. Credit risk funds were an exception, managing to attract net inflows of Rs 49.46 crore. Liquid funds experienced the largest withdrawals, with outflows of Rs 29,680 crore, followed by money market funds and overnight funds, which saw net redemptions of Rs 24,691 crore and Rs 15,524 crore, respectively.
Hybrid mutual funds also experienced a decline in investor inflows, with net investments dropping to Rs 10,560 crore in May, nearly half of the Rs 20,565 crore recorded in April.
Gold ETFs Experience Decline
Gold ETFs faced a downturn, registering net outflows of Rs 725 crore after inflows of Rs 3,040 crore in April. Other ETFs also saw net withdrawals totaling Rs 620 crore. Conversely, index funds attracted Rs 943 crore, while overseas fund of funds received Rs 763 crore.
At the industry level, open-ended mutual fund schemes reported net outflows of Rs 62,848 crore in May, a stark contrast to the net inflows of Rs 3.26 lakh crore in the previous month. Consequently, the mutual fund industry's assets under management (AUM) decreased to Rs 81.38 lakh crore at the end of May, down from Rs 81.71 lakh crore in April.
Ankur Punj, MD & Business Head at Equirus Wealth, commented on the situation, stating, "The slowdown in equity mutual fund inflows indicates a more cautious investor sentiment amid rising geopolitical tensions and increased market volatility. Concerns regarding global events, especially in the Middle East and fluctuating crude oil prices, have prompted many investors to take a wait-and-see approach rather than making new allocations. While short-term sentiment may remain low, the fundamental growth narrative for Indian equities is still strong, and disciplined long-term investing remains the best strategy for wealth accumulation."