Small-cap mutual fund category assets grew to Rs 2.43 lakh crore at the end of March 2024 on the back of a surge in retail investor participation and a market rally. This represents an increase of 83 percent on an annual basis. The increase in wealth was driven by the increase in the number of investors. The number of folios reached 1.9 crore in March 2024, which was 1.09 crore a year ago. There was an increase of 81 lakhs. This reflects investors’ inclination towards small-cap funds.
Increasing trend in small cap funds
Gopal Kavalireddy, vice president (research) at FIRES, said the growth trajectory of India’s economy is attracting increased interest from people. This has led many unlisted small-cap companies to seek support from the capital market. This trend offers promising opportunities to investors with an eye on long-term growth prospects. However, factors like general elections, monsoon forecast, economic activity, inflation, GDP estimates and earnings growth for FY 2024-25 could impact small-cap company valuations and bring volatility in the segment, he said.
More than Rs 40 thousand crore investment came
Small-cap funds saw inflows of Rs 40,188 crore in FY 2023-24, higher than the Rs 22,103 crore recorded in the previous financial year. However, the month of March also saw net selling of Rs 94 crore in small-cap funds for the first time in two years. According to Association of Mutual Funds in India (AMFI) data, assets under management (AUM) of small-cap mutual funds stood at Rs 2.43 lakh crore at the end of March 2023 and Rs 1.33 lakh crore at the end of March 2022.
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