After a gap of two months, equity mutual funds (MFs) have witnessed positive inflows to the tune of R1,500 crore in the month of May. However, on an overall basis, the MF industry saw redemptions of over R48,800 crore with most money flowing out of income and liquid schemes amid tight

liquidity conditions.

According to data provided by the Association of Mutual Funds in India (Amfi), average assets under management (Aaum) in the month of May stood at over R7.31 lakh crore down by 6.9% as compared to April. Market participants, inflows into equity schemes were propelled by inflows coming through systematic investment plans (SIPs).

Vijai Mantri, managing director and chief executive officer of Pramerica mutual fund says, ?I think the major reason for money flowing into equity schemes is lower market levels. It?s likely that some investors might have entered at lower valuations.? Equity markets as measured by Sensex fell 3.3% in the month of May.

A CEO from a leading fund house said, ?It is surprising to witness overall net inflows into equity schemes while many fund houses only saw huge redemptions in May. We believe that, some high value money from high net worth individuals ( HNIs ) might have come in for some top fund houses.?

In May, positive inflows were witnessed for equity schemes ( R1,546 crore ), balanced schemes ( R217 crore ), fund of fund ( FOF) schemes investing overseas ( R343 crore) and Gold exchange traded funds ( ETFs ) (R569 crore). In contrast, income schemes (R11,141 crore ), liquid schemes (R39,603 crore), gilt schemes (R82 crore), equity linked saving schemes equity (R68 crore) and other ETF (R631 crore) saw redemptions for the month.

Market participants also added that banks might have redeemed liquid schemes following new regulations by the Reserve Bank of India (RBI) which capped investments by banks to 10% of their net worth on March 31 of the previous fiscal year into the liquid schemes.

However, with short term rates looking attractive, there was a lot of action on the short term fixed maturity plans (FMPs) with many fund houses launching 3-6 months FMPs and amassing reasonable amount of assets.