Market participants say that, even in current month, flows have been strong. However,fund managers are cautious since they believe the markets could be volatile in the months to come.
Flows into mid and small-cap equity schemes are picking up. In April, mid-cap and small-cap schemes saw inflows of `491.04 crore and `955.83 crore respectively. Market participants say that, even in current month, flows have been strong. However,fund managers are cautious since they believe the markets could be volatile in the months to come.
Data from Association of Mutual Funds in India (Amfi) showed that, equity oriented schemes had seen inflows of `4,608.74 crore with multi-cap funds witnessing highest inflows of `1,873.06 crore, followed by small cap and mid cap schemes.
“Mutual funds have seen sharp inflows into mid- and small-cap funds in the past few months as valuations have come down and investors believes that money can be made in this segment. Apart from systematic investment plans (SIPs), investors have been putting money largely in lump-sum in small- and mid-cap funds,”said a official from the leading fund house.
In the last one year, Nifty mid-cap and small-cap index have given returns of -6.5% and -16.5% respectively. But in last six months, the performance has improved and mid-cap index is down by under one percent and small-cap index is up by 2.2%.
“Rally has started in mid and small-cap segments and investors are thinking that its a good investment bet and expecting this segment will do well in the months to come, this is one the reason why we are witnessing flows in the past few months,” said Jimmy Patel, MD and CEO at Quantum Asset Management Company (AMC).
But returns of mid and small-cap funds is not encouraging in the last one year. Data from Value Research shows that, small-cap category has given returns of -12.69% in last one year and mid-cap fund category is also down, giving negative returns of 5.84% in the same time frame. Out of 24 mid-cap funds, only three funds have managed to give positive returns in the last one year, while in small-cap funds, only Axis Small-Cap scheme has managed to give positive returns among 15 schemes, shows the data from Value Research.
“Even as flows have increased in the past few months, it can be risky for investors as there will be huge volatility in such funds and they should be prepared to face it,” added Patel. In April, even thematic funds and equity-linked saving schemes (ELSS) had seen inflows of `567.17 crore and `458.65 crore respectively, shows data from Amfi.