Mutual funds' attraction as an investment option paled in May as the industry could collect only Rs 30,000 crore in the month, down by 80 per cent over that in the previous month.

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Combined net inflows into 35 fund houses of the country was at Rs 30,148 crore in May, down from Rs 1,54,192 crore at the end of April, as per data available on the Association of Mutual Funds in India (AMFI) website.

"During April there was an abnormal increase in the inflow as corporate houses parked excess cash into the mutual funds to avoid paying higher tax. But in May, the inflows have come down to logical levels," Taurus Mutual Fund Managing Director R K Gupta said.

After pulling out over Rs 54,54,650 crore in the April-March period of 2008-09, the 35 fund houses in the country saw net inflows in the first two months of the current fiscal, which analysts feel was mainly due to the revival in the country's equity market.

At May-end, debt or income funds consumed a major chunk of the inflows worth Rs 28,114 crore, while equity funds saw inflows to the tune of Rs 1,900 crore.

"The returns from liquid schemes lessed in May and there were some redemption from the fixed income schemes as well," he added.

During May, liquid or money market funds, which invest in safer and short-term instruments like treasury bills, certificates of deposit and commercial paper, saw inflows worth Rs 856 crore. However, Gilt and balanced funds saw net outflows of Rs 792 crore and Rs 43 crore during the month.

"Chances are there that inflow into the equity schemes would increase in future, while that in the fixed income category would lessen," he added.

The mutual fund industry saw its average assets under management (AAUM) breaching the record Rs 6,00,000-crore level, an increase of Rs 87,829.87 crore, or 16 per cent, over the previous month.

The combined average AUM of the 35 fund houses in the country increased to Rs 6,39,129.82 crore in May compared to Rs 5,51,299.95 crore in April.

Mutual funds have increased their investments in the equity market over the past two months. The fund houses have put over Rs 2,291 crore in equities in May.

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