Small-cap funds again in the limelight after a brief blip
Amfi Data shows that small-cap funds saw net inflows of Rs 4,495.13 crore in October—the highest among all categories on equity-oriented schemes
- Nov 9, 2023,
- Updated Nov 9, 2023 3:41 PM IST
The BSE SmallCap index, which is looked upon as the barometer of the performance of the small-cap universe, is up more than 32 per cent in the current calendar year. This is significantly higher than the rise of the benchmark Sensex that is up less than 7 per cent in 2023 till date.
The surge in the small-cap arena made a large section of market participants, especially mutual funds, wary of putting in more money in the segment with a few fund houses temporarily halting taking in lump sum investments in small-cap schemes.
While it led to a temporary blip in the inflows in the small-cap schemes last month, the latest data shows that investors have once again started betting big on the small-cap segment.
Data from the Association of Mutual Funds in India (AMFI) shows that small-cap funds saw net flows of Rs 4,495 crore in October, much higher than the previous month’s net flows of Rs 2,678.47 crore—small-cap funds had registered strong inflows of nearly Rs 4,265 crore in August.
Incidentally, small cap funds accounted for the largest share of inflows within the category of equity-oriented schemes in October.
More importantly, small cap funds have been attracting a lot of investor attention in the last few months. For instance, AMFI data shows that the net inflow in small cap funds was pegged at a record Rs 5,472 crore in June.
AMFI Chief Executive N.S. Venkatesh attributes the trend to investors believing that there is still upside left in the segment even though he said that investors should be cautious in their investment approach.
“Essentially, we are seeing flows in small cap funds because investors still believe that there is ability to make gains because the valuations have corrected substantially and is now again going up. Some retail investors believe there is enough juice left and hence the money is coming in,” said Venkatesh.
“Some funds stopped taking money because deployment became an issue… Overall, investors should take a cautious look at small cap funds and do their own due diligence and then only take a step forward,” he added.
Meanwhile, sectoral/thematic funds also saw strong inflows of nearly Rs 3,896 crore in October. On an overall basis, equity-oriented schemes saw net inflows of Rs 19,957 crore in October.
The mutual fund industry’s total assets under management (AUM) were pegged at Rs 46.72 lakh crore, higher than the previous month’s Rs 46.58 lakh crore.
Interestingly, the monthly net flows through systematic investment plans or SIPs came quite close to the Rs 17,000 crore mark and was pegged at Rs 16,928 crore in October.
“The SIP numbers reflect strong growth in the SIP book and the trust reposed by retail investors in mutual funds as an investment vehicle and SIP as a route to investment into mutual funds. We are confident of reaching Rs 17,000 crore in November,” said Venkatesh.
Also read: Hot stocks on November 9: YES Bank, Suzlon Energy, Reliance Power, IndusInd Bank and more
Also read: HMA Agro announces stock split in four months post-listing
The BSE SmallCap index, which is looked upon as the barometer of the performance of the small-cap universe, is up more than 32 per cent in the current calendar year. This is significantly higher than the rise of the benchmark Sensex that is up less than 7 per cent in 2023 till date.
The surge in the small-cap arena made a large section of market participants, especially mutual funds, wary of putting in more money in the segment with a few fund houses temporarily halting taking in lump sum investments in small-cap schemes.
While it led to a temporary blip in the inflows in the small-cap schemes last month, the latest data shows that investors have once again started betting big on the small-cap segment.
Data from the Association of Mutual Funds in India (AMFI) shows that small-cap funds saw net flows of Rs 4,495 crore in October, much higher than the previous month’s net flows of Rs 2,678.47 crore—small-cap funds had registered strong inflows of nearly Rs 4,265 crore in August.
Incidentally, small cap funds accounted for the largest share of inflows within the category of equity-oriented schemes in October.
More importantly, small cap funds have been attracting a lot of investor attention in the last few months. For instance, AMFI data shows that the net inflow in small cap funds was pegged at a record Rs 5,472 crore in June.
AMFI Chief Executive N.S. Venkatesh attributes the trend to investors believing that there is still upside left in the segment even though he said that investors should be cautious in their investment approach.
“Essentially, we are seeing flows in small cap funds because investors still believe that there is ability to make gains because the valuations have corrected substantially and is now again going up. Some retail investors believe there is enough juice left and hence the money is coming in,” said Venkatesh.
“Some funds stopped taking money because deployment became an issue… Overall, investors should take a cautious look at small cap funds and do their own due diligence and then only take a step forward,” he added.
Meanwhile, sectoral/thematic funds also saw strong inflows of nearly Rs 3,896 crore in October. On an overall basis, equity-oriented schemes saw net inflows of Rs 19,957 crore in October.
The mutual fund industry’s total assets under management (AUM) were pegged at Rs 46.72 lakh crore, higher than the previous month’s Rs 46.58 lakh crore.
Interestingly, the monthly net flows through systematic investment plans or SIPs came quite close to the Rs 17,000 crore mark and was pegged at Rs 16,928 crore in October.
“The SIP numbers reflect strong growth in the SIP book and the trust reposed by retail investors in mutual funds as an investment vehicle and SIP as a route to investment into mutual funds. We are confident of reaching Rs 17,000 crore in November,” said Venkatesh.
Also read: Hot stocks on November 9: YES Bank, Suzlon Energy, Reliance Power, IndusInd Bank and more
Also read: HMA Agro announces stock split in four months post-listing