MUMBAI: After months of resilience, there are early signs of investing fatigue among retail mutual fund investors. In May, as the stock market showed extreme volatility—thanks to the war in West Asia—net inflows into equity funds fell to the lowest level in more than a year at, Rs 22,908 crore. On a month-on-month basis, this was a 40% drop, from Rs 38,440 crore recorded in April. A drop of such magnitude was not seen for more than three years, data released by industry trade body Amfi showed.In May, gross flows through the systematic investment plans (SIPs) also dipped, but only marginally to Rs 30,954 crore from Rs 31,115 crore in April and Rs 32,087 crore in March. The number of contributing SIP accounts also showed a marginal dip by about 84,000 to slightly above 9.6 crore.
Signs Of Slowdown: Net Inflows Dive To Lowest In Over A Yr
According to Shashwat Singh, fundamental analyst, Bajaj Broking, May 2026 witnessed a distinct cooling in mutual fund investment activity. “This fall was broad-based, with significant declines across large cap, midcap, and small cap segments, while flexi cap and sectoral thematic funds experienced even sharper contractions compared to April 2026,” Singh wrote in a note.In May, net inflows into flexi cap funds dipped to Rs 5,176 crore from Rs 10,148 crore in April, while in sectoral/ thematic funds, net inflows were at Rs 648 crore (against Rs 1,949 crore in April).According to Aditya Agarwal of Wealthy. in, as markets turned extremely volatile in May, investors who typically deploy money through periodic lump-sum investments, may have paused fresh allocations. “Seasoned investors also seem to be possibly looking for a better entry point or a sharper correction before deploying surplus cash,” Agarwal said.Another factor behind the slowdown could be SIP pauses, which is also reflected in the reduction in overall SIP flows in May compared to April, Agarwal said. “At this stage, it looks more like investors are pausing or delaying fresh equity allocations rather than making a clear move away from equities.” In the debt fund segment, investors shifted out of most of the fund categories with the net outflow at almost Rs 97,000 crore, Amfi data showed.According to Umesh Sharma, CIO-Debt, The Wealth Company MF, the withdrawals were driven by tighter liquidity conditions, which pushed short-term yields higher.