Now Reading: Smallcap and midcap funds surge to 30% of active equity folios
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Smallcap and midcap funds surge to 30% of active equity folios
Smallcap and midcap (SMID) funds now account for nearly 30% of active equity mutual fund folios, up from 19% in July 2022, according to rediff.com. In July, SMID funds added 815,000 folios, an 11-month peak, and saw net inflows of nearly Rs 14,000 crore, an all-time high. The rally has been driven by strong stock performance: the Nifty Smallcap 100 and Nifty Midcap 100 indices rose 31% and 22% respectively since April, while the Nifty 50 gained only 9%.
The Hindu Businessline reported separately that total equity mutual fund assets under management (AUM) hit a record Rs 48.5 lakh crore in July, with active equity schemes growing 13.3% year-on-year. Systematic investment plan (SIP) contributions stayed above Rs 30,000 crore for the fifth consecutive month, totalling Rs 31,961 crore in July. SIP assets crossed Rs 18 lakh crore for the first time.
Nifty Next 50 recorded the highest monthly gain among indices in July at 2.82%, according to a Motilal Oswal report cited by The Hindu Businessline. The Nifty 50 rose 2.17% and the Nifty 500 gained 2.02%. Information Technology led sectoral gains with 16.77%, while Energy declined 2.54%. International markets were mixed, with the US Nasdaq 100 falling 6.61% and China gaining 8.60%.
Indian Opinion Analysis
All three sources reported neutral data from official exchange and fund house reports, with no discernible stance differences. The coverage uniformly emphasises record inflows and AUM growth, but two critical points emerge: the rapid shift of investor money into smallcap and midcap funds, flagged as a liquidity risk by experts in the rediff.com story, contrasts with the aggregate market gains reported by The Hindu Businessline. Meanwhile, the Motilal Oswal report shows that sectoral performance was sharply divergent, with IT surging while energy and defence fell, suggesting the rally is not broad-based. Investors should watch whether the regulator SEBI responds to growing concentration in SMID funds, as it did with increased disclosure mandates earlier.
Coverage: 3 sources, 3 neutral
Sources (3): rediff.com (neutral report), thehindubusinessline.com (neutral report), thehindubusinessline.com (2) (neutral report)
This story was synthesised by AI from the 3 sources linked above. Methodology and corrections.
Updated: this story now draws on 3 sources.
