Mutual fund investments slowed in May 2026, with net inflows into equity funds falling sharply from the previous month. However, Zee Business Managing Editor Anil Singhvi said there is no reason for investors to worry as systematic investment plan (SIP) contributions remained strong and investor confidence in mutual funds continues to be intact.
Singhvi said the overall assets under management (AUM) of the mutual fund industry stood at around Rs 81.92 lakh crore in May. Equity fund AUM saw a marginal increase to over Rs 36 lakh crore.
According to the latest data, equity mutual fund inflows declined nearly 40 per cent month-on-month to around Rs 22,923 crore in May from about Rs 38,000 crore in April.
Singhvi said the decline was mainly due to a reduction in lump-sum investments rather than any weakness in retail participation.
“People who invest lump-sum money have become a little cautious because of global uncertainties and geopolitical tensions. However, investors who follow a disciplined investment approach through SIPs continue to invest regularly,” he said.
SIP contributions remained above the Rs 30,000-crore mark for the third consecutive month at Rs 30,954 crore in May. Singhvi noted that the decline compared with April was only around Rs 200 crore, which is insignificant considering the size of monthly SIP inflows.
He said nearly 7.2 million new SIP accounts were registered during the month, highlighting continued participation from retail investors.
“There is no concern on the SIP front. The flow remains strong and consistent. This shows that long-term investors are continuing with their investment plans,” Singhvi said.
Gold ETFs Witness Outflows, Silver ETFs Gain Interest
One of the key trends in May was the reversal in flows into gold exchange-traded funds (ETFs). Gold ETFs saw outflows of around Rs 725 crore during the month after attracting more than Rs 3,000 crore in April.
Singhvi said investors booked profits after the sharp rise in gold prices. “Gold prices increased significantly, and investors decided to take some money off the table. That is why outflows were seen from gold ETFs,” he said.
In contrast, silver ETFs witnessed inflows of around Rs 2,133 crore in May compared with a small outflow in April. According to Singhvi, investor interest in silver remained strong despite similar duty-related impacts affecting both precious metals.
Why Mutual Funds Restricted Fresh Investments in Gold ETFs
Several asset management companies (AMCs), including major fund houses, have imposed restrictions on fresh investments in gold ETFs and gold fund of funds (FoFs).
Explaining the move, Singhvi said gold ETFs received substantial inflows during FY26, resulting in operational challenges for fund houses.
“When investors put money into gold ETFs, fund houses have to buy and hold physical gold. Managing large quantities of gold becomes increasingly difficult as assets grow,” he said.
He added that rising gold imports also increase pressure on India’s import bill and can affect the rupee. Singhvi clarified that the restrictions mainly affect large investors making fresh lump-sum investments. Existing investments, SIPs and redemption requests remain unaffected.
Retail investors can also continue buying gold ETFs through stock exchanges without any restrictions.
Investors Should Stick to Asset Allocation
On investment strategy, Singhvi advised investors not to increase their exposure to gold and silver excessively. He recommended maintaining 10-15 per cent allocation to precious metals within an overall portfolio.
“If your gold allocation is already above 10-15 per cent, you can consider reducing it. Otherwise, stick to your asset allocation plan and avoid speculation,” he said.
He also advised investors not to discontinue existing SIPs in gold-related schemes.
Anil Singhvi’s Fund of the Month
For investors looking to deploy fresh money, Singhvi identified small-cap mutual funds as an attractive segment. He noted that small-cap indices remain below their previous record highs, unlike some broader market indices that have already recovered significantly.
“Small-cap funds can offer better return potential when markets improve, although the risk is also higher,” he said. Among the options available, Singhvi highlighted the small-cap funds of Bandhan Mutual Fund, Nippon India Mutual Fund and HDFC Mutual Fund.
However, his preferred choice was the small-cap fund offered by Bandhan Mutual Fund. “The Bandhan Small Cap Fund has been performing well, and investors looking to allocate money to the small-cap category can consider this fund,” Singhvi said.
NFO Pick for Investors
On new fund offers (NFOs), Singhvi highlighted several active and passive fund launches currently open for subscription. Among them, he said the ICICI Prudential Nifty Smallcap 250 ETF could be considered by investors interested in passive investing through the small-cap segment.
However, he added that investors may also choose established small-cap funds instead of investing in NFOs.