Small Cap Funds have made investors strong earnings, what is the reason for trust – why small cap funds is first choice of investors
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New Delhi: Smallcap funds continue to be attractive to retail investors even as overall fund inflows into the equity category are down to a third of the last six months’ average. This has been revealed by a report in Economic Times. Data from the Association of Mutual Funds in India (AMFI) shows that among all equity fund categories, small-cap funds saw the highest inflow of ₹24,082 crore in the last one year. This is 20% of the total equity inflow. This was followed by an inflow of ₹19,811 crore in mid-cap funds and ₹18,041 crore in sectoral funds. The gross buy-to-sell ratio of smallcap funds stood at 2.78 in May as against 1.12 for the overall equity fund category, a reading for the sixth consecutive year. Months have been above 2.0. Gross buy-to-sell ratio measures purchasing power. Its assets under management (AUM) grew 47% year-on-year to ₹1.53 lakh crore in May, while overall equity fund category AUM grew 24% to ₹16.56 lakh crore in May on the back of continued inflow in small-cap funds.
The small-cap fund category has become the fifth largest in terms of AUM among equity funds. In the last year, there has been a net addition of 1.09 crore folios in equity funds, of which 30% belong to small-cap funds.
The small-cap fund category has become the fifth largest in terms of AUM among equity funds. In the last year, there has been a net addition of 1.09 crore folios in equity funds, of which 30% belong to small-cap funds.
What is the reason behind the gravitation of retail investors towards small-cap funds?
Firstly, the top 10 small-cap funds in terms of AUM have given a return of 20.7% last year, while large-cap funds could give only 12.10%.
Atul Gupta, managing partner, Asinvestcon, says, “Despite the risk involved in small-cap funds, they are expected to deliver healthy returns over the next five to seven years. Hence it has become the most preferred choice for investors in the last few months.
Where did the maximum investment come in a year (in rupees)
Small Cap Fund 24,082 crore
Mid Cap Fund ₹19,811 crore
Sectoral Fund ₹18,041 crore
Property in this category increased by 47% in May as compared to other categories
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