By Christina Titus
Inflows into corporate bond funds in May were the highest in the past 26 months. Mutual funds under the corporate bond category witnessed a record inflow of Rs 11,983 crore, the most since the March 2023 figure of Rs 15,626 crore, Amfi data show.
Year-to-date as on May 2025, these funds registered a 14.5% jump in AUM to Rs 1.96 lakh crore, compared with Rs 1.71 lakh crore in December 2024.
“As monetary easing was expected in the RBI June policy, institutional players have preferred corporate bond funds over other debt schemes. These inflows led to demand for instrument across 2-5-year tenure,” said Deepak Agrawal, head – fixed income and chief investment officer, Kotak Mutual Fund.
In the June policy, the RBI surprised the markets with a 50-bps repo rate cut and lowered the cash reserve ratio to 3% from 4%, supporting the system liquidity by an additional Rs 2.5 lakh crore.
“In a situation of positive liquidity environment, the curve gets steepened and people preferred to lock in corporate bond funds,” said the CIO of a domestic mutual fund.
Agrawal said, “Even though there is merit in investing in corporate bond funds with one-year horizon (given the steep yield curve), the pace of inflows may slow down based on the RBI guidance that the space for further monetary easing is limited, reducing the scope for capital gains.”
Overall, the debt mutual fund category witnessed an outflow of Rs 15,908 crore in May, on the back of Rs 40,205-crore selloff in the liquid fund category.
