Large-cap funds see 16% decline in inflows while mid- and small-cap funds gain traction. Are investors shifting towards riskier bets?

Investor preference appears to be shifting towards riskier categories such as mid- and small-cap mutual funds compared to large cap funds, as per the latest data released by the Association of Mutual Funds in India (AMFI) which showed a sharp divergence in inflow trends across market-cap categories.

According to the monthly data released by AMFI, large-cap mutual funds witnessed a 16% decline in inflows in April while mid-cap and small-cap funds continued to attract strong investor interest with monthly growth of 8% and 10%, respectively.

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Large-cap funds received inflows of around Rs 2,525 crore in April, lower than the previous month inflow of Rs 2,997 crore, reflecting relatively weaker investor appetite for large cap companies. In contrast, mid-cap funds attracted approximately Rs 6,551 crore, while small-cap funds received nearly Rs 6,885 crore — both categories recording fresh highs in inflows. The latest numbers suggest that retail investors continue to prefer higher-growth segments despite ongoing market volatility and concerns around valuations.

With small cap funds receiving more inflows compared to mid caps, Nitin Agrawal, CEO, Mutual Funds, InCred Money said small cap edges ahead of mid cap. According to Agrawal, this is a notable positioning signal as the small cap funds have historically seen sharper drawdowns during periods of market stress, and the fact that investors are not only holding but actively adding to this category suggests either renewed confidence in the India growth story at the margin, or an allocation catch-up by investors who see post-correction value in smaller companies.

In April, Nifty50 gained 5.81% whereas Nifty Midcap 150 and Nifty Smallcap 250 gained 10.72% and 13.43% respectively. (Source: ACE MF)

How large cap, mid cap and small cap schemes performed in April
Large cap mutual funds gave an average return of 6.52% with Quant Large Cap Fund offering the highest return of around 11.56% out of 34 large cap funds in the said time period. Samco Large Cap Fund gave the lowest return of 3.16% in April.

There were 33 mid cap funds in April which gave an average return of 10.12%. HSBC Midcap Fund delivered the highest return of 14.19%, followed by ICICI Prudential Midcap Fund which gained 12.21%. HDFC Mid Cap Fund gave the lowest return of 7.33% in April.

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Small cap funds gave an average return of 12.34% in April and there were 36 funds in the category in the said time period. Out of these 36 funds, Bank of India Small Cap Fund gave the highest return of around 16.62% and HDFC Small Cap Fund gave the lowest return of 8.05% in April.

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