Small-caps Investments

Mid-cap and small-cap mutual fund schemes have continued to attract strong investor interest, garnering nearly Rs 30,350 crore in inflows during the April-September period of the current financial year, driven by impressive returns delivered by these segments. In comparison, the cumulative inflow into mid-cap and small-cap funds stood at Rs 32,924 crore during the same period last year, according to data from the Association of Mutual Funds in India (Amfi). The inflow trend persists despite concerns raised by market regulator Sebi over heightened inflows into small-cap and mid-cap funds, as experts believe investors will continue to favour these categories for their potential to deliver high returns. "Small caps will continue to grow at a faster rate for years to come. I expect the inflows to continue as Indians want to invest in the high-growth sectors. Small cap funds should be seen as an integral part of one's portfolio allocation and not a tactical play," Trust Mutual Fund CEO .

Sebi will review its rule that mandates small- and mid-cap funds to invest at least 65% of their assets in such stocks if fund managers find it is "restraining risk management

Investors flocked to large-cap oriented mutual funds with influx of Rs 1,287 crore in January, making it the highest fund infusion in 19 months, as a significant run-up in small and mid caps prompted them to book profit. This is a huge turnaround following a net outflow of Rs 281 crore in December. Also, the quantum was 80 per cent higher than inflows of Rs 716 crore in January last year. The latest inflow helped push the asset base of large-cap equity category by 26 per cent to Rs 3 lakh crore at January-end from Rs 2.38 lakh crore a year ago. According to latest data by Association of Mutual Funds in India (Amfi), equity mutual funds focused on large-cap received inflow to the tune of Rs 1,287 crore in January. This was the highest level since July 2022, when the category saw an inflow of Rs 2,052 crore. Given the significant run-up in small and mid caps, investors are booking some profits and rebalancing into large-caps, Kaustubh Belapurkar, Director - Manager Research at ...

Ownership in Nifty Smallcap 250 stocks rises from 7.67% to 8.67% in two years

Multi-cap funds, with their higher exposure to mid- and small-caps, can outperform but with higher volatility

Only investors with appetite to handle their high volatility should enter them

As economic growth bottoms out, liquidity stays benign, corporate earnings pick up and risk aversion diminishes, we expect the valuation discount of mid-caps to narrow vis a vis large-caps in CY20

Direct investors in small-cap stocks should book profits and wait for corrections, while those taking the fund route should invest with at least a 7-10 year horizon