As markets saw a modest pullback, monthly inflows into large, mid, and small-cap mutual funds dropped in September by up to 18%. Mutual fund experts say that this dip is mainly due to concerns about high market valuations and profit-taking.
“Investments across large, mid, and small-cap funds declined in September, mainly due to concerns about high market valuations and profit-taking. Factors like global uncertainty, rising crude oil prices, and ongoing FPI outflows also increased short-term volatility, leading some investors to delay new allocations,” Rajesh Minocha, Certified Financial Planner (CFP) and Founder of Financial Radiance, in an interaction with ETMutualFunds.
Also Read | Mutual fund SIP stoppage ratio rises to 76% in September even as contributions hit record Rs 29,361 crore
According to monthly data by the Association of Mutual Funds in India ( AMFI), the inflows in largecap funds declined by 18% to Rs 2,319 crore in September against an inflow of Rs 2,834 crore in August. Monthly inflows in midcap went down by 5% to Rs 5,085 crore compared to Rs 5,330 crore in August. And lastly, the inflows in smallcap funds dipped by 13% to Rs 4,362 crore compared to Rs 4,992 crore in August.
The expert notes that valuation concerns, particularly in the mid-cap and small-cap segments, have strongly impacted the market, as prior rallies pushed prices above historical averages, contributing to cautious investor sentiment.
“Some investors have booked profits, while others are waiting for more favourable entry points. Fund managers are also deploying new inflows cautiously to avoid overpaying for quality stocks,” said Minocha.
Another expert says that mid- and smallcap funds also remained strong contributors, although both categories witnessed a mild slowdown compared to August as investors turned slightly cautious after the sharp rally in smaller stocks.
“Large- and mid-cap funds continued to attract steady allocations of around INR 3,805 crore, benefiting from investors seeking balanced exposure across segments, while large-cap funds saw moderate inflows of INR 2,319 crore, indicating a more measured approach at elevated valuations,” said Nehal Meshram, Senior Analyst – Manager Research, Morningstar Investment Research India.
In August, though the inflows in the largecap and midcap category increased, the inflows in small caps declined by 23% compared to the month of July. Largecap and midcap funds witnessed a surge of 33% and 3% respectively, in the monthly inflows.
Amid the volatile market, mutual fund experts were recommending largecap funds to the investors through the SIP mode. Moreover, the investments in equity mutual funds are made with a long-term view.
So the longterm investors investing through SIP in these categories should not worry about their investments; rather, disciplined investing remains essential for these investors, the expert said.
“Discipline remains essential for long-term SIP investors. Rather than trying to time the market, investors should focus on asset allocation aligned with their risk profile and goals. Market corrections offer opportunities to acquire more units at lower prices, potentially enhancing long-term returns,” Minocha said.
The benchmark indices - Nifty50 and BSE Sensex - were down by 0.06% and 0.12% respectively in September. Nifty Midcap 100 - TRI and Nifty Midcap 150 - TRI were down by 0.49% and 0.31% respectively, in the same time period. Nifty Smallcap 100 - TRI was up by 0.40% whereas Nifty Smallcap 250 - TRI was down by 0.22% (Source: ACE MF)
Also Read | Equity mutual fund inflows slide to Rs 30,422 cr, drop for 2nd straight month
On average, largecap funds gave a negative return of 0.14% in September. There were 33 funds, of which the Tata Large Cap Fund gave the highest return of around 1.26% whereas the Mahindra Manulife Large Cap Fund lost the most of around 1.15% in the same period.
There were around 31 midcap funds in the said time period, which on average lost 0.98%. Helios Mid Cap Fund gave the highest return of 0.57% whereas Motilal Oswal Midcap Fund lost the most of around 5.59% in September.
And lastly, smallcap funds on average lost 0.59% in September. There were 31 funds in the said period, of which the LIC MF Small Cap Fund gave the highest return of 0.93% whereas the DSP Small Cap Fund lost the most of around 2.45% in the same period.
Post looking at the performance delivered by these categories in September, Minocha believes that while short-term volatility and profit-taking may continue, the long-term growth outlook for Indian equity markets remains strong.
“While short-term volatility and profit-taking may continue, the long-term growth outlook for Indian equity markets remains strong. Long-term investors are encouraged to stay invested and consider flexi-cap and multi-cap funds, where fund managers handle asset allocation. Diversifying SIPs across various market capitalisations is an effective strategy to capture India's structural growth potential,” Minocha said.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)
“Investments across large, mid, and small-cap funds declined in September, mainly due to concerns about high market valuations and profit-taking. Factors like global uncertainty, rising crude oil prices, and ongoing FPI outflows also increased short-term volatility, leading some investors to delay new allocations,” Rajesh Minocha, Certified Financial Planner (CFP) and Founder of Financial Radiance, in an interaction with ETMutualFunds.
Also Read | Mutual fund SIP stoppage ratio rises to 76% in September even as contributions hit record Rs 29,361 crore
According to monthly data by the Association of Mutual Funds in India ( AMFI), the inflows in largecap funds declined by 18% to Rs 2,319 crore in September against an inflow of Rs 2,834 crore in August. Monthly inflows in midcap went down by 5% to Rs 5,085 crore compared to Rs 5,330 crore in August. And lastly, the inflows in smallcap funds dipped by 13% to Rs 4,362 crore compared to Rs 4,992 crore in August.
The expert notes that valuation concerns, particularly in the mid-cap and small-cap segments, have strongly impacted the market, as prior rallies pushed prices above historical averages, contributing to cautious investor sentiment.
“Some investors have booked profits, while others are waiting for more favourable entry points. Fund managers are also deploying new inflows cautiously to avoid overpaying for quality stocks,” said Minocha.
Another expert says that mid- and smallcap funds also remained strong contributors, although both categories witnessed a mild slowdown compared to August as investors turned slightly cautious after the sharp rally in smaller stocks.
“Large- and mid-cap funds continued to attract steady allocations of around INR 3,805 crore, benefiting from investors seeking balanced exposure across segments, while large-cap funds saw moderate inflows of INR 2,319 crore, indicating a more measured approach at elevated valuations,” said Nehal Meshram, Senior Analyst – Manager Research, Morningstar Investment Research India.
In August, though the inflows in the largecap and midcap category increased, the inflows in small caps declined by 23% compared to the month of July. Largecap and midcap funds witnessed a surge of 33% and 3% respectively, in the monthly inflows.
Amid the volatile market, mutual fund experts were recommending largecap funds to the investors through the SIP mode. Moreover, the investments in equity mutual funds are made with a long-term view.
So the longterm investors investing through SIP in these categories should not worry about their investments; rather, disciplined investing remains essential for these investors, the expert said.
“Discipline remains essential for long-term SIP investors. Rather than trying to time the market, investors should focus on asset allocation aligned with their risk profile and goals. Market corrections offer opportunities to acquire more units at lower prices, potentially enhancing long-term returns,” Minocha said.
The benchmark indices - Nifty50 and BSE Sensex - were down by 0.06% and 0.12% respectively in September. Nifty Midcap 100 - TRI and Nifty Midcap 150 - TRI were down by 0.49% and 0.31% respectively, in the same time period. Nifty Smallcap 100 - TRI was up by 0.40% whereas Nifty Smallcap 250 - TRI was down by 0.22% (Source: ACE MF)
Also Read | Equity mutual fund inflows slide to Rs 30,422 cr, drop for 2nd straight month
On average, largecap funds gave a negative return of 0.14% in September. There were 33 funds, of which the Tata Large Cap Fund gave the highest return of around 1.26% whereas the Mahindra Manulife Large Cap Fund lost the most of around 1.15% in the same period.
There were around 31 midcap funds in the said time period, which on average lost 0.98%. Helios Mid Cap Fund gave the highest return of 0.57% whereas Motilal Oswal Midcap Fund lost the most of around 5.59% in September.
And lastly, smallcap funds on average lost 0.59% in September. There were 31 funds in the said period, of which the LIC MF Small Cap Fund gave the highest return of 0.93% whereas the DSP Small Cap Fund lost the most of around 2.45% in the same period.
Post looking at the performance delivered by these categories in September, Minocha believes that while short-term volatility and profit-taking may continue, the long-term growth outlook for Indian equity markets remains strong.
“While short-term volatility and profit-taking may continue, the long-term growth outlook for Indian equity markets remains strong. Long-term investors are encouraged to stay invested and consider flexi-cap and multi-cap funds, where fund managers handle asset allocation. Diversifying SIPs across various market capitalisations is an effective strategy to capture India's structural growth potential,” Minocha said.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)
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