Mid and small cap mutual fund schemes catch investors’ fancy


Mumbai: Investors poured money into mid- and small-cap mutual fund products in January, driving up flows into the equity scheme category by Rs 7,877 crore as against Rs 4,499 crore in December. Industry officials said cheaper valuations of the smaller shares and a rally in the broader market before the Budget resulted in fresh flows into these categories. In November 2019, flows had dipped to as low as Rs 1,311 crore.

“The valuations difference of smallcaps is huge when compared to large caps, that saw investors allocate money to this category,” says Alok Agarwala, head (research and advisory), Bajaj Capital.

Flows into mid-cap schemes increased to Rs 1,499 crore compared to Rs 796 crore in the previous month. Small-cap schemes attracted Rs 1,073 crore in January as against Rs 421 crore in the previous month. Multi-cap funds that invest in a mix of large-, mid- and small-cap stocks saw flows of Rs 1,722 crore as compared to Rs 512 crore.

“The recent market rally seems to have driven the inflows into small and mid-cap funds. As a result, the small-cap AUM has also seen the biggest jump in the last 9 months,” says Sundeep Sikka, CEO, Nippon Life India Asset Management. Total AUM of small-cap funds was Rs 52,482 crore as on January 30.

The upward trend in SIP collections continued with monthly collections increasing by Rs 14 crore to an all-time high of Rs 8,532 crore. This is the 14th successive month in a row where SIP inflows remained north of the Rs 8,000-crore mark. Total AUM of the mutual fund industry rose to Rs 27.86 lakh crore from Rs 26.54 lakh crore in December.

Among the various categories, flows into large caps in January was at Rs 1,154 crore compared to Rs 1,135 crore in the previous month. Debt funds saw inflows of Rs 1,09,306 crore as investors put money into liquid and overnight funds. Balanced funds, credit risk funds and gilt funds continued to see outflows in January as well. The outflow from balanced funds that invest 65-75 per cent of their money in equities was Rs 1,260 crore. With Vodafone ratings seeing a downgrade, investor aversion to credit category increased with the category witnessing outflows of Rs 1,215 crore.



Among debt funds, banking and PSU funds that primarily invest in a portfolio of ‘AAA’ companies continued to see strong inflows of Rs 3,033 crore.