Mid-cap mutual fund schemes have delivered better return than small-cap amid strong inflow in last one year. The average return of mid-cap funds increased 29 per cent while that of small-cap jumped 25 per cent in last one year and topped the list of actively managed funds.
Multi-cap and large and mid-cap funds have delivered an average return of 23 per cent even while large funds were the least performer with a return of 15 per cent in 2024.
Among thematics, pharma funds gave a superior return of 40 per cent much higher than 27 per cent delivered by second placed IT-focused thematic funds.
Interestingly, the inflows into equity and hybrid funds more than doubled in 11 months of last year to ₹5.02 lakh crore against ₹2.23 lakh crore largely due to strong inflows through SIP.
In fact, SIP inflows at ₹2 lakh crore alone accounted for 57 per cent to the total inflow of ₹3.5 lakh crore in equity schemes.
Amid strong bullish equity market trend, the mutual fund industry managed to attract a hoard of new investors. The industry added 9.8 million investors till last November against 5.4 million additions in the same period in 2023. The total unique investor identified by PAN number was at 51.8 million.
The record number of new fund offers in the equity space also aided in getting new investors for the industry. The industry launched 153 equity schemes last year compared to 89 launches in 2023.
Kavitha Narayan, Vice President and Head Research and New Initiatives, Capricorne Mindframe said small cap funds which had attracted huge inflows till December 2023, had lost momentum to thematic funds which saw a series of new fund offers.
With SEBI chairperson Madhabi Puri Buch warning of froth in the small cap category last March and concern on over valuation reversed the small cap inflows and the focus shifted to other category of funds.
In fact, she said many small cap managers mitigated liquidity risks by investing a significant portion of up to 35 per cent of their fund in the large cap space, while keeping under the SEBI guidelines. Liquidity has been a growing concern in the small cap space, especially for funds that have been receiving significant inflows, leading to exposures in individual stocks also going up, she added.
Nirav Karkera, Head-Research, Fisdom, said in the near term, large-cap equities present an attractive investment opportunity due to favourable valuations.
Investors seeking to capitalise on sectoral or thematic opportunities could focus on cyclical sectors, which are likely to benefit from the ongoing economic recovery, he added.
