Mid, smallcap dips may spur rejig in MF flow
There has been a build-up of froth in small- and mid-caps, says Mohanty. Getty Images/iStock
Small and midcap schemes are likely to see lower inflows in March after recent correction in the space and regulatory diktat to conduct stress tests on such schemes, said industry officials
About twofifths of equity flows in the past two years have gone to such schemes, said experts. Inflows into smallcap funds in the first 10 months of this fiscal stood at ₹37,360 crore, 69% higher than FY23. Flows in midcap schemes also crossed the ₹20,205 crore of FY23. Distributors and advisors are asking clients to park a larger share of the incremental money in flexi cap, large cap, large and midcap and multicap schemes instead of small and midcap funds.
“Investors have been chasing returns,” said Swarup Mohanty, CEO, Mirae Asset Mutual Fund. “We have seen a buildup of froth in the smalland midcap space and some of the incremental flows which could move to other equity categories and even hybrid funds.” The Nifty Midcap 100 and Nifty Smallcap 100 have slid 3.7% and 6.6%, respectively, in the last one month. Market observers expect largecaps to relatively outperform broader market in the months ahead.
Advantage large-caps
B. Gopkumar, CEO, Axis Mutual Fund, said investors are preferring multicap funds over flexicaps as the former invests an equal portion in small, mid and largecap stocks whereas flexicaps are tilted towards large caps.
(The writer is with The Hindu businessline)