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Small Cap MF Witnessed Outflow After 30 Consecutive Months In A Slump

Small Cap MF Witnessed Outflow After 30 Consecutive Months In A Slump

By: Geetanjali

Since 2021 small cap MF was in a slump for 2.5 consecutive years, in March 2024, it witnessed a net outflow of Rs.94.2 crores for the first time since September 2021. After the Association of Mutual Funds in India (AMFI) put a bar on the excess valuation of the funds to safeguard investors interest.

The 30 month slump came as a result after SEBI (Stocks and Exchange Board of India) raised its concerns over the “Froth” in the small cap MF segment, which raised speculations amongst investors.

As per data released by AMFI, Small Cap MF’s saw a net outflow of Rs.94.2 crores, in March, 2024 in difference to Rs 2,922.45 crore inflow in the month of February. Recording the highest outflow of investors money since September 2021.

While the Midcap Mutual Funds inflow of cash rolled down to Rs 1,017.69 crore from Rs 1,808.18 crore in February, 2024, which is a 43% month on month in the month of March, lowest since October 2021.

Though the Midcap funds seems to be struggling, large cap Mutual Funds are  in a significant better position than the small and mid cap as the inflow increased by 131% and reached Rs 2,128 crore in March, 2024

Akhil Chaturvedi, chief business officer at Motilal Oswal AMC said, “The shift in trend is in line with valuation differentials among large v/s mid and small caps, suggesting that large caps/flexi cap oriented schemes may attract higher flows in the coming months,”.

Following the hit, SIP (Systematic Investment Plan) also recorded increased investment from Rs 19,187 crore in February, to Rs 19,271 crore in March for two months in a row.

Manish Mehta, National Head – Sales, Marketing & Digital Business, Kotak Mahindra AMC stated, “Rising market led to profit booking by investors while SIPs continue to be encouraging. We witnessed investment rebalancing where investors seem to have moved from small-cap schemes to large-caps. Fixed-income flows were negative due to year-end phenomenon,”.

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