SIP stoppage slows, inflows continue: Key takeaways from AMFI's May numbers for equity investors

Here are some of the key takeaways for equity investors in May:

SIP stoppage slows down, inflows continue

Mutual fund SIP assets rose to Rs 14.61 lakh crore in May against Rs 13.90 lakh crore in April. The SIP AUM was around 20.24 percent of the total AUM of the mutual fund industry as against 19.9 percent in April. Another major point was the SIP stoppage ratio, which came down to around 72 percent, from nearly 300 percent in April. The SIP stoppage ratio reflects the percentage of discontinued or expired SIPs relative to new registrations. For the month, according to the Association of Mutual Funds in India (AMFI), the new SIP registrations were around 54 lakh versus around 44 lakh in discontinued or matured SIP accounts, bringing the stoppage ratio to around 72 percent.

Earlier, AMFI chairperson Venkat Chalasani had noted that the rise in SIP stoppage was due to the recalibration/ removal of inactive accounts, an activity which ended in April 2025.

Equity AUM leads industry growth

While there was a slowdown in equity flows in May, equity inflows continued to contribute to overall MF growth. According to AMFI data, total mutual fund AUM rose to Rs 72.20 lakh crore from Rs 70 lakh crore. Equity-oriented funds contributed nearly 65 percent of flows into the industry. Jatinder Pal Singh, CEO, ITI Mutual Fund, said that the slowdown in net equity inflows can be attributed to several factors, including a rise in equity market performance in May 2025, and a potential phase of consolidation or profit booking by investors. "Additionally, rising global volatility—triggered by geopolitical tensions following India’s launch of Operation Sindoor against Pakistan and ongoing concerns over global inflation—fuelled a risk-off sentiment among certain investors," he said.

Large, mid and smallcap funds see a dip

Despite continued flows, a certain level of caution was evident across large, mid, and smallcap categories, all of which saw double-digit declines in inflows. Largecap funds saw a significant decline in inflows, down 53.2 percent to Rs 1,250.5 crore from Rs 2,671.46 crore. Smallcap fund inflows dropped by 19.6 percent to Rs 3,214 crore versus Rs 3,999.95 crore, while midcap funds recorded a 15.2 percent decline, with inflows falling to Rs 2,808.7 crore from Rs 3,313 crore in April. Experts suggest this could be a result of investors looking for safer options such as hybrid with exposure to large, mid and smallcaps rather than investing in the category fund itself.

Arbitrage funds gain

Amongst categories, hybrid funds have seen substantial gains. Suranjana Borthakur, Head of Distribution & Strategic Alliances, Mirae Asset Investment Managers (India), said, "What’s particularly encouraging is the rise in hybrid categories—especially arbitrage, BAFs, and multi-asset funds. Arbitrage funds, in particular, are being seen as a safe space to temporarily park funds ahead of further deployment."

During the month, hybrid funds saw overall AUM rise from Rs 9.14 lakh crore to Rs 9.55 lakh crore in May, backed by Rs 20,765 crore in net inflows and market gains. Arbitrage funds led with Rs 15,702 crore inflows, followed by balanced hybrids at Rs 3,410 crore. Dynamic asset allocation funds added Rs 1,136 crore, while multi-asset funds received Rs 2,927 crore. Equity savings and conservative hybrid funds saw smaller inflows of Rs 569 crore and Rs 89 crore, respectively, reflecting broad-based investor interest across hybrid categories.

On the demand, Himanshu Srivastava – Associate Director- Manager Research, Morningstar Investment Research India, said, "The volatility in the markets has been high, and I think the stress between the cash and futures markets would also be attractive for arbitrage to make a significant amount of money. Plus, arbitrage is also quite tax efficient compared with some of the debt categories, and can be a replacement for some of the fixed income carry on the short end side like short term or ultra short money market."

Thematic and sectoral continue to find demand

On the continued flows into thematic and sectoral funds, Vikas Gupta of Omniscience Capital noted that investors should be cautious while allocating and be conscious of valuations in the popular sectors. "If they pay attention to the PE ratios of the funds they are allocating to, it will help rational capital allocation and lower chances of sectoral or thematic bubbles," he said. For the month, inflows into thematic funds were around Rs 2,052 crore.

Gold continues to shine

Gold ETFs saw renewed investor interest, clocking an inflow of Rs 292 crore after a Rs 5.82 crore outflow in April. Nehal Meshram, Senior Analyst – Manager Research, Morningstar Investment Research India, said, "The renewed traction in May signals a gradual return of investor interest, likely driven by resilient gold prices and sustained global uncertainties that reinforce gold’s appeal as a strategic hedge." She added that the relative stability in gold prices through May has provided a more attractive entry point for investors looking to build or rebalance allocations toward safer assets.

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