Mutual Funds: Investors Take Liking to Small-Caps Over Mid-Caps, Large-Caps

While providing significant returns, small-caps in the mutual fund category have emerged as a preferred choice among investors.

As per analysts, small caps hold the potential to offer consistent maximum returns, especially on a long-term basis. Comparatively, small-caps are known to move faster than large-caps and mid-caps mutual fund schemes.

Small-cap funds invest in relatively smaller companies or entities with promising growth prospects. Investors are assured of a quick gain once these companies witness a rise in their position in the stock market.

Additionally, small caps are known to provide the benefit of diversification of portfolios. This way, small caps are known to lessen the impact of underperforming funds of larger entities.

As per the data shared by the Association of Mutual Funds in India (AMFI) for July 2023, small caps have witnessed the highest inflow, which is closely followed by mid-cap funds.

Considering the growth chart, small-cap and mid-cap have showcased consistent outperformance as compared to large-cap funds.

The companies that fall under the small-cap category are reasonably sized entities with consistent performance in the market.

The Systematic Investment Plans (SIPs) inflows registered a spike of an all-time high in July 2023, as per data from the AMFI. At Rs 15,242.7 crore, SIP inflows touched a record high during this phase.

The rise in SIP numbers was witnessed irrespective of the fact that equity mutual funds recorded a 12% month-on-month dip in inflow, which was Rs 7,626 crore in July 2023.

With strong backing from retail investors who have displayed renewed interest in mutual funds, the growth numbers have been strong in inflow across scheme categories.

More than 33 lakh new SIP accounts had been registered, and the highest number at Rs 15,215 crore of monthly contribution was recorded in the previous month.