Consistent inflows push small-cap funds AUM past Rs 2 trn mark in Nov

Strong, incessant net flows and favourable market conditions propped up the assets base for the small-cap mutual fund category to cross Rs 2 lakh crore mark in November-end, a sharp surge of 69 per cent from a year earlier.

On a month-on-month basis, the Assets Under Management (AUM) of the category grew 10 per cent to Rs 1.99 lakh crore, data with the Association of Mutual Funds in India (AMFI) showed.

Since the fourth quarter of 2019-20, the AUM for the category has seen a phenomenal rise, due to favourable market movement, along with record net inflows.

Small-cap funds attracted Rs 37,178 in this year (till November). This includes Rs 3,699 crore last month and a record fund infusion of Rs 4,495 crore in October.

On the other hand, the large-cap category saw a pull out of Rs 2,688 crore in the first 11 months of this year.

"A few fund houses have limited the inflows in their small-cap funds over the last quarter given the sharp rise in flows and concerns on valuations," Morningstar India had mentioned in its September quarterly report.

Going by the AMFI data, the asset base of the small-cap mutual fund hit its peak of Rs 2.2 lakh crore at the end of November.

Additionally, investor accounts in the category, too, climbed a staggering 62 lakh folios to 1.6 crore in November from 97.52 lakh a year-earlier. This shows that investors have become more inclined toward small-cap funds.

Under Sebi's rule, in small-cap mutual funds, fund managers are required to invest at least 65 per cent of their portfolios in small-cap stocks.

G Pradeepkumar, CEO, Union Asset Management Company, suggested that investors stagger their investments in small- and mid-cap funds in view of the possibility of short-term volatility.

Overall, the AUM of the 42-player mutual fund industry reached Rs 49.04 lakh crore in November-end from Rs 40.37 lakh crore in November 2022, suggesting a gain of 22 per cent.