In the month of March, small cap mutual funds experienced redemption, but there was a significant increase in the number of new mutual fund folios in this category, reaching a staggering 363,000 in the last month of FY2024, according to data from AMFI. Similarly, the mid cap category saw 299,584 new folios, while the large cap funds had 179,114 new folios.
In terms of investment, small cap mutual funds witnessed an outflow of ₹94 crore in March, whereas mid-cap mutual funds received an inflow of ₹1,017 crore, and large cap funds received ₹2,127 crore during the same period.
Analyzing the table above, it is evident that while investors withdrew their investments from small cap mutual funds, the number of new folios in this category significantly increased. This trend was also observed in the mid cap and large cap schemes. Additionally, other mutual fund categories such as flexi cap and ELSS funds saw a significant increase in their folios.
Flexi cap mutual funds experienced an additional 256,000 folios, reaching a total of 14.2 million in March. Similarly, ELSS folios increased by 253,000, and value funds saw 171,000 new folios. Furthermore, flexi caps and ELSS funds received inflows of ₹2,738 crore and ₹1,789 crore, respectively.
It is worth noting that the Securities Exchange Board of India (Sebi), the markets regulator, had advised mutual fund houses to limit inflows into small cap schemes in February 2024. Analysts and investors suggest that the small cap and midcap space remains expensive, and those planning to invest should adopt a staggered approach.
Overall, there is a positive bias towards the equity market, despite relatively rich valuations. This optimism is based on expectations of improved corporate profitability, stable domestic macros, and strong liquidity inflows. Many small cap and midcap funds continue to show potential for growth.
#mutual Fund
