Mid & smallcaps turn the tide for equity mutual fund flows

AI Summary

Equity mutual fund inflows in India surged over 26% in June, driven by strong performance and investor interest in mid- and small-cap stocks. Systematic investment plans and thematic funds also saw increased investor participation, supporting market gains despite geopolitical uncertainties.

Mumbai: Equity mutual fund inflows surged more than a quarter in June, after having retreated to a 12-month low in May, as robust gains in mid- and small-cap stocks encouraged retail investors to pump more money into these plans.Investors poured ₹28,973 crore into equity plans in June, up 26% from May's ₹22,908 crore, data from industry body AMFI showed. Equity mutual fund inflows had fallen 40% in May - to their lowest level in a year - as investors scaled back fresh lump-sum allocations amid concerns over the fallout of the West Asia conflict.Retail investors returned aggressively to the mid- and small-cap segments in June, allocating ₹11,692 crore to the two categories, accounting for about 40% of the month's total equity inflows."Mid and small caps simply held up better, and flows followed the resilience," said Viraj Gandhi, CEO, Samco Mutual Fund. "Investors backed the segment of the market that showed the least damage, while stepping back from diversified and thematic mandates."Collections through systematic investment plans (SIPs) also rose 2.67% to ₹31,781 crore from ₹30,954 crore in May. Assets under management (AUM) for the mutual fund industry edged up 0.8% to ₹82.05 lakh crore, aided by marked-to-market gains despite outflows from debt funds.132323293Thematic Opportunities The Nifty Midcap 150 and Nifty Smallcap 250 rose 4.8% and 8.7%, respectively, while the Nifty gained 1.4% in June.Over the past three months, the Nifty Midcap 150 has gained 9.11%, the Nifty Smallcap 250 has risen 15.34%. The Nifty has climbed 1.3% in the past three months, although the gauge is yet to retrace levels seen before the start of the Iran war late February.Samco's analysis showed that inflows into mid-cap funds surged 30% above their 12-month average to Rs 6,090 crore - the highest among all equity categories. Small-cap funds attracted Rs 5,602 crore, or 19% above their 12-month average.Among other equity categories, flexi-cap funds attracted Rs 5,231 crore, followed by large & mid-cap funds at Rs 4,321 crore, multi-cap funds at Rs 3,070 crore and large-cap funds at Rs 2,067 crore.Sectoral and thematic funds also witnessed a recovery, attracting Rs 1,469 crore in June compared with Rs 648 crore in May, indicating renewed investor interest in thematic opportunities.Among hybrid strategies, aggressive hybrid funds, which invest around 65-80% in equities and 20-35% in fixed income, saw inflows jump to Rs 2,121 crore from Rs 655 crore in the previous month.