Run SIP with long horizon, avoid lump sum bets amid high valuations

Despite stretched valuations and market volatility, smallcap funds saw strong inflows in May as investors bank on long-term potential and return to SIPs for stability

Smallcap funds remain a preferred choice among investors despite volatility in equity markets. In May 2025, they received net inflows of ₹3,214 crore, second only to flexicap funds, which saw inflows of ₹3,841 crore, according to data from the Association of Mutual Funds in India (Amfi). 

These funds’ appeal lies in their potential to create long-term wealth.  A report by Bajaj Finserv Asset Management Company (AMC) notes that smallcap stocks saw a five-fold rise in market capitalisation, from ₹17 trillion in 2017 to ₹92 trillion by the end of 2024. 

These funds invest at least 65 per cent of their