Smallcap mutual fund investors pull the plug after two and a half years
froth in the broader market seems to have had an impact on mutual fund investors, too, who have started pulling out money from their smallcap investments for the first time after two and a half years.
In March, the smallcap category saw an outflow of Rs 94.17 crore. The category saw its last considerable outflow of Rs 248.73 crore in September 2021. In FY24, the category received total inflows of Rs 40,188.56 crore with the highest seen in June 2023 at Rs 5,471.75 crore.
During March, smallcap was the only equity category, which witnessed net outflows.
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In the midcap category, too, net investments dipped to Rs 1,017.6 crore, down from Rs 1,808.1 crore in February.
“Favourable market conditions over the last couple of years saw investors getting high returns in these segments and consequently, investors have also flocked to these categories with ever-increasing flows,” said Melvyn Santarita of Morningstar Investment Research India.
The small and midcap space were in the limelight in the last few months as many of the less-tracked stocks gave multibagger returns despite valuation-related warnings by brokerages. The smallcap boom caught Sebi’s attention, which ordered mutual fund companies to run stress tests and declare the results publicly every fortnight.
The regulator also warned about froth building up in mid and smallcap segments.
“The purpose of the stress test was to ascertain how soon fund managers
