The turnaround in flows was the key factor behind the industry’s overall outflows during the month.
The shift is largely attributed to institutional treasury movements, which tend to be volatile around the beginning and end of financial periods, leading to sharp swings in allocations between liquid and debt-oriented schemes.
Within debt categories, liquid funds witnessed heavy redemptions of ₹29,681 crore in May compared with strong inflows in the previous month. Corporate bond funds also saw net outflows of ₹7,010 crore, reversing inflows of ₹6,196.5 crore in April.
Credit risk funds, however, continued to attract modest inflows of ₹49.5 crore, though sharply lower than ₹1,317.7 crore in the previous month.
“The net outflow from debt-oriented schemes is largely driven by redemptions in liquid, overnight and money market categories, which move in line with corporate treasury and tax payment cycles, not investor sentiment. This is seasonal noise, not a structural retreat from fixed income,” said Nitin Agrawal, CEO – Mutual Funds, InCred Money.
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