Mid- and small-cap mutual funds collect $3,035 billion with high returns

NEW DELHI: Mid-cap and small-cap mutual fund schemes continue to attract strong interest from investors, with an acquisition of Rs 33,500 crore in April-September this fiscal year, driven by impressive returns generated by these segments. It attracted an inflow of close to Rs.
In comparison, cumulative inflows into mid-cap and small-cap funds during the same period last year stood at Rs 32,924 crore, according to Association of Mutual Funds of India (Amfi) data.
Despite market regulator Sebi expressing concern over rising inflows into small- and mid-cap funds, the trend of inflows continues and experts believe investors can earn high returns. We believe that we will continue to prefer these categories because of their gender.
“Small-cap stocks will continue to grow at a fast pace for years to come. Indians want to invest in high-growth sectors and we expect inflows to continue. Small-cap funds are an integral part of portfolio allocation. It should be seen as a tactical thing and it is not,” said Sandeep Bagla, CEO of Trust Mutual Fund.
Separately, mid-cap funds received inflows of Rs 14,756 crore and small-cap funds received inflows of Rs 15,586 crore. This will take the total inflow to Rs 30,342 crore, the data showed.
Tradejini Chief Operating Officer Trivesh said investors’ strong interest in mid-cap and small-cap mutual funds is driven by the potential for high returns in these sectors. The midcap and smallcap indexes have registered gains of around 20% and 24%, respectively, this fiscal, outperforming both the Nifty and largecap indices. Although previous years showed even higher returns and increased capital inflows, the current performance continues to interest investors.
Additionally, the March 2024 stress test also played a role, reinforcing confidence by confirming that fund managers were prepared to deal with market volatility, said Anand Rati, deputy chief executive officer, Wealth. Mr. Feroze Azeez said:
He said, “The mid-cap and small-cap segments are expected to grow by 20% and 25% respectively in FY2025 and inflows will remain strong, especially as SIP inflows continue to hit new peaks. I’m anticipating that.”
Additionally, corporate earnings will drive flows into these categories.
Last year, mutual funds launched new fund products (NFOs) in thematic funds and new fund management strategies in the passive fund management space. ZFunds co-founder and CEO Manish Kothari said if these NFOs achieve broader market returns, inflows into those categories could increase. .
If there is a correction in the broader market, flows of mutual fund schemes in the small and mid-cap category may come down, he added. Large mutual funds saw inflows of over Rs 7,067 crore in the April-September period of FY25, after recording an outflow of Rs 5,700 crore in the same period in FY24.
With the increase in inflows, the number of investors (folios) in the two schemes increased by 1.32 billion year-on-year to nearly 4 billion in the six months ended September 30, 2024.
“Despite the regulatory warnings, as the number of folios grows, we see an increase in confidence in the performance of these funds,” said Tribesh of Tradesini.
Overall, assets in the two categories – mid-cap and small-cap increased by 63% to Rs 7.26 billion at end-September 2024 from Rs 4.44 billion a year ago. agency

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