Rs. 30,350 Crore Inflow in Mid-Cap and Small-Cap Funds: Is the Market Overcrowded?
Mid-cap and small-cap mutual fund schemes are increasingly attracting attention as investors seek higher returns. These categories attracted around Rs. 30,350 crore in inflows from April to September of the current financial year. The sustained interest in the segments can be largely attributed to the high returns they have offered, attracting investors looking for growth opportunities in a competitive market.
As per the Association of Mutual Funds in India (AMFI), mid-cap and small-cap funds received an inflow of Rs. 32,924 crore over the same time a year ago.
In the first half, mid-cap funds experienced an inflow of Rs. 14,756 crore, with the highest inflow recorded in September at Rs. 3,130 crore. Meanwhile, small-cap funds attracted Rs. 15,586 crore, reaching the high point in August with an inflow of Rs. 3,209 crore.
Both mid-cap and small-cap funds indices have shown incredible growth, surging by 24% and 25%, respectively, in this financial year. From the beginning of FY25 until September 2024, mid-cap and small-cap funds have delivered impressive average returns of 26.29% and 25.25%, respectively.
Among the other diversified equity mutual fund categories, multi-cap and flexi-cap funds have attracted inflows of Rs. 23,145 crore and Rs. 8,167 crore, respectively, during the period. Large-cap mutual funds recorded inflows of Rs. 7,067 crore from April to September FY24, a remarkable improvement compared to an outflow of Rs. 5,700 crore during the same period in FY24.
Additionally, the number of investor folios has increased by 1.32 crore year-on-year, reaching approximately 4 crore by September 30, 2024, as reported by PTI.
As of September 30, 2024, the assets under management in mid-cap and small-cap schemes were Rs. 3.97 lakh crore and Rs. 3.28 lakh crore, respectively.
“Investment in mid-cap and small-cap funds should be carefully considered based on an investor’s risk tolerance. Investors must recognize that mid-cap and small-cap segments are highly volatile; while they can deliver exceptionally high returns in up markets, they can also drop down significantly when the market goes down. Therefore, investors should approach these funds under their risk tolerance and commit to a long-term investment horizon.
