Unfazed by market fall, largecap, flexicap MF schemes shine in Oct

Both largecap, flexicap funds saw all-time-high inflows last month

Two of the largecap-oriented mutual fund (MF) offerings — flexicap and largecap funds — witnessed a spike in investor interest in October amid a fall in the equity market.

 

Both the categories logged their all-time-high inflows last month.

 

Largecap funds, which invest at least 80 per cent of their corpus in larger companies, raked in Rs 3,452 crore during October. Inflows into flexicap schemes stood at Rs 5,181 crore.

 

The schemes, which fall into the two categories, are considered less risky compared to other equity schemes owing to their largecap tilt.

 

Flexicap schemes are free to allocate any proportion of their corpus in largecap, midcap and smallcap stocks. But most of these funds generally maintain around 60 per cent largecap exposure.

 

The aggregate inflows into flexicap and largecap funds at Rs 8,633 crore last month was 73 per cent higher than the figure in September.

 

The surge in interest came on the back of changing market conditions.

 

In October, the key benchmark indices logged their worst monthly slide since March 2020 with Nifty 50 falling 6.2 per cent and Sensex declining 5.8 per cent. 

 

“Investors showed interest across the board. However, a renewed interest can be seen in categories having significant largecap exposure such as largecap, multicap, large & midcap and flexicap. Given that largecaps feature well from the valuation perspective in the current market scenario against midcaps and smallcaps, there could have been some rebalancing done towards largecaps. That’s not to say that mid and small caps were far behind. Both these categories received robust flows,” said Himanshu Srivastava – associate director — manager research, Morningstar Investment Research India.

 

The inflow momentum in smallcap and midcap funds remained buoyant with the two categories together garnering Rs 8,455 crore. The addition of new investment accounts was also much higher than in most other categories.

 

Large and flexicap schemes had struggled to garner inflows on most months in the last two years as investors opted for the high-performing smallcap, midcap and thematic funds.

 

This was despite experts cautioning against high valuations in the midcap, smallcap and certain sectors, recommending investors to opt for largecaps.

 

Mutual fund houses, according to their recent communications with investors, said they continue to hold this view.

 

“Although India's macros look robust, valuations are not cheap. Valuations of mega caps and large caps are reasonable compared to midcaps and smallcaps. Investors who wish to add equity exposure should focus on largecap-oriented schemes or flexible mandate schemes or schemes which can manage higher volatility,” ICICI Prudential MF said in its latest factsheet.