Small and mid-cap funds draw Rs 48,500 crore in first four months of FY27

Investors are pouring money into small-cap and mid-cap funds, pulling nearly Rs 48,500 crore in the first four months of FY27, while large-cap funds attracted only Rs 4,863 crore in the same period, the Economic Times reports. Small-cap funds alone received Rs 25,200 crore, almost half of the Rs 51,000 crore invested in all of FY26. Mid-cap funds garnered Rs 23,218 crore, about 44% of last year's total.

The rush follows strong earnings from smaller companies. According to Capitaline data cited by the Economic Times, aggregate net profit for a sample of 213 small-cap firms surged 42.5% in the June quarter, the biggest jump in six quarters. Revenue rose 19.3%. Among 113 mid-cap firms, revenue climbed 20% and operating profit rose 27%, extending double-digit growth to 13 quarters. The BSE SmallCap Index rose 6.8% and the MidCap Index gained 9.4% over the past 12 months, while the Sensex fell 4.4%.

"Since September, many small-cap companies have strengthened balance sheets," Dinshaw Irani, CEO of Helios Capital Asset Management, told ET, adding that large-cap IT and FMCG sectors face earnings pressure. The Nifty SmallCap 250's price-to-earnings ratio stands at 32 times, above its five-year average of 29, while the Nifty MidCap 150's PE of 33 is slightly below its five-year average of 34.