Mid, Small-Cap Funds Beat Flexi-Cap Inflows in June
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- Mid-cap funds received ₹6,090 crore in net inflows in June, surpassing flexi-cap funds for the first time since December 2023, according to AMFI data
- Small-cap funds drew ₹5,602 crore in inflows during June, exceeding flexi-cap fund inflows and reflecting renewed investor appetite for broader market segments
- Flexi-cap funds attracted ₹5,231 crore in June, maintaining healthy inflows but growing at a slower pace compared to mid- and small-cap categories
- Madhu Lunawat said investors are becoming more constructive on mid- and small-cap stocks due to improving earnings visibility after a period of correction and consolidation
- Jiral Mehta attributed the shift to stronger recent performance, attractive valuations post-correction, and expectations of falling interest rates benefiting smaller firms
- Value Research data shows mid-cap funds returned 6.6% over one year and 19.66% annualized over three years, outperforming flexi-cap funds' 1.04% and 13.22% respectively
Why it matters: Retail investors are reallocating toward mid- and small-cap funds after sustained underperformance, signaling a potential shift in market sentiment. With these categories outpacing flexi-cap funds by over 5 percentage points in one-year returns, the inflow shift reflects tangible momentum rather than speculation, increasing pressure on fund managers to justify allocations amid tighter valuation scrutiny.
