This comes following an inflow of about Rs 1.51 lakh crore in the preceding month.
Morningstar Investment Adviser Director of Fund Research Kaustubh Belapurkar attributed the outflow to withdrawal from liquid funds, which are susceptible to sharp inflows and outflows as corporates park short term money in these funds.
However, flows in equity, balanced and debt funds still remain strong, he added.
According to data by the Association of Mutual Funds in India (Amfi), a net sum of Rs 40,711 crore has been pulled out from mutual funds in May, as compared to Rs 1,50,703 crore in the preceding month.
After taking into consideration the latest outflow, total investment in mutual fund schemes stood at Rs 1.10 lakh crore in the first two months of the current fiscal.
Individually, liquid funds or money market category — with investments in cash assets such as Treasury Bills, certificates of deposit and commercial paper for shorter horizon — witnessed an outflow of Rs 64,692 crore last month.
However, equity and equity-linked saving scheme (ELSS) saw an infusion of Rs 10,790 crore. Besides, balanced and income funds witnessed an inflow of Rs 7,663 crore and Rs 5,124 crore respectively.
The outflow has pulled assets under management (AUM) of all the active 42 fund houses to Rs 19.04 lakh crore at the end of May, from Rs 19.36 lakh crore at April-end.
Mutual funds are investment vehicles made up of a pool of funds collected from a large number of investors. The funds are invested in stocks, bonds and money market instruments, among others.