In May, retail investors demonstrated strong confidence in the equity market by pouring substantial capital into select mutual fund schemes. Data indicates that eight equity mutual funds each recorded net inflows exceeding Rs 1,000 crore, underscoring continued domestic participation.
Overall, 475 out of 742 equity and equity-oriented mutual funds saw positive inflows during the month. However, investments remained largely concentrated among a handful of prominent and well-established schemes.
Top Performers in May Inflows
- HDFC Mid Cap Fund: Emerged as the leading gainer with net inflows of Rs 2,605 crore, boosting its Assets Under Management (AUM) to Rs 97,350 crore.
- Kotak Arbitrage Fund: Followed with inflows of Rs 2,127 crore, increasing its AUM to Rs 72,079 crore.
- Nippon India Small Cap Fund: Attracted Rs 1,931 crore in fresh investments, maintaining its position as the largest scheme in its category with Rs 74,604 crore AUM.
- Bandhan Small Cap Fund: Garnered Rs 1,873 crore.
- Nippon India Growth Mid Cap Fund: Witnessed inflows of Rs 1,595 crore, taking its AUM to Rs 47,415 crore.
- Quant Small Cap Fund: Received Rs 1,400 crore.
- HDFC Flexi Cap Fund: Attracted Rs 1,342 crore, pushing its AUM above the significant Rs 1 lakh crore mark to Rs 1.01 lakh crore.
- Kotak Midcap Fund: Rounded out the list of top gainers with Rs 1,209 crore in inflows, increasing its AUM to Rs 64,749 crore.
Investor Preference and Performance Trends
Investor preference for flexi-cap funds was evident even during the market correction period of March-April 2026. During this time, Parag Parikh Flexi Cap Fund led inflows among the top 35 schemes, attracting Rs 7,549 crore, representing about 10.1% of cumulative flows. HDFC Flexi Cap Fund followed with Rs 5,473 crore, accounting for 7.3% of total flows.
The concentration of inflows into a select group of schemes highlights a growing trend among retail investors. They are increasingly favoring funds that demonstrate scale, consistent long-term performance, and are managed by experienced teams, particularly during periods of market uncertainty.
Return data supports this, showing investors continue to reward schemes with superior long-term performance. For instance, HDFC Mid Cap Fund, Kotak Midcap Fund, and Nippon India Growth Mid Cap Fund all generated three-year Compound Annual Growth Rates (CAGR) exceeding 23%, ranking among the highest in their respective categories.