Investors shift focus to large-cap category in August, shows data

The data from the Association of Mutual Funds in India shows that daily AUM of the large-cap category stood at Rs 2.10 trillion in August against Rs 1.97 trillion in July

Investors continued to pour money into equity schemes in August amid a sharp up-move in blue chip stocks.
 
The focus, however, shifted away from mid- and small-caps towards large-caps, which have been laggards this year.
 
The data from the Association of Mutual Funds in India (Amfi) shows that daily assets under management (AUM) of the large-cap category stood at Rs 2.10 trillion in August against Rs 1.97 trillion in July. AUM of small-cap funds marginally reduced by Rs 381 crore to Rs 91,402 crore in August.
 
Market participants say investors are moving money from small-caps due to concerns about expensive valuations and the impact of regulatory tightening.
 
Vidya Bala, co-founder of Primeinvestor.in, says: “Investors have been moving to large-cap funds as they have managed to give better returns than mid- and small-cap schemes over the past few months. Also, there was some correction in the small- and mid-cap space that has led to some investors move to the large-cap category.”
 
Over the past month, the S&P BSE Smallcap index has gained 0.86 per cent, while the S&P BSE Midcap index is up 4.51 per cent. On the other hand, the S&P BSE Sensex has surged nearly 10 per cent. The small-cap index’s relative performance to the Sensex is the worst in three years.
 
Thanks to a stellar rally in several blue chips, the returns scorecard of several large-cap funds has improved in recent weeks. The data from Value Research shows that the average return of large-cap funds is around 6.5 per cent, higher than small- and mid-cap funds which have returned an average -0.18 per cent and 2.30 per cent, respectively.

Market participants say that redemption pressure has slowed down, and new sales have gone up substantially over the last few months, leading to positive flows.
 
In the past five months, equity funds have seen net inflows of over Rs 51,207 crore. In July alone, equity funds had witnessed net inflows of Rs 22,584 — led by the success of ICICI Prudential’s Flexicap fund.
 
Most equity sub-categories, such as large- & mid-cap funds, flexi-cap funds, and mid-cap had seen a steady increase in AUM on a month-on-month basis in August.