Smallcap mutual fund inflows drop 29% MoM to Rs 6,407 crore in October. Should investors be cautious or continue investing?

Inflows in smallcap funds fell 29% to Rs 6,407 crore in October, down from Rs 9,038 crore in the previous month, according to the monthly data by the Association of Mutual Funds in India (AMFI).

AMFI data showed that the category received the second-highest inflows in October.

Nitin Agrawal, CEO, Mutual Funds, InCred Money, said that smallcap moderation from Rs 9,039 crore to Rs 6,408 crore is healthy, not alarming. September's Rs 9,039 crore was an exceptional reading driven partly by value accumulation post the August-September drawdown.


Also Read | Equity MF inflows fall 14% MoM to Rs 32,993 crore in October; smallcap inflows slide 29%: AMFI

Himanshu Srivastava, Principal, Manager Research, Morningstar Investment Research India, said that the moderation could indicate some degree of caution among investors towards these segments, particularly given the elevated valuations in certain pockets of the broader market.

However, the continued healthy inflows suggest that investors remain constructive on their long-term growth prospects despite near-term uncertainties, Srivastava further said.

In October, smallcap funds lost 4.95% on average. There were 36 funds in the said time period, of which Tata Small Cap Fund lost the most of around 10.47%, followed by Bank of India Small Cap Fund that lost 6.89%.

Invesco India Smallcap Fund lost the least, at around 2.22% in the same period. Nippon India Small Cap Fund, the largest fund in the category based on the assets managed, lost 4.77% in October.

Nifty Smallcap 250 - TRI was down 4.65% in the month of October, according to the data on ACE MF.

Manish Mehta, Chief Business Officer, SBI Mutual Fund, said midcap/smallcap schemes continued to attract inflows due to a strong SIP book.

Suranjana Borthakhur, Head of Distribution & Strategic Alliances, Mirae Asset Investment Managers (India) said that Small and mid cap funds accounted for about 34% of equity inflows in October, the lowest share in seven months and down from about 57% in July. Mid cap inflows fell 38% month on month to their lowest level since May, and small cap inflows fell 29%.

Also Read | Mutual fund SIP inflows decline marginally MoM to Rs 32,160 crore in October

The smallcap category had an AUM of Rs 4.40 lakh crore in October, declining 5% from Rs 4.61 lakh crore in September.

(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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