Invest in smallcap mutual funds, increase wealth by 83 percent

Small Cap Mutual Funds: Small cap mutual fund category assets rose to Rs 2.43 lakh crore at the end of March 2024 due to a surge in participation by retail investors and market rally. This represents an increase of 83 percent on year-on-year basis.

The increase in the number of investors led to an increase in wealth. The number of folios reached 1.9 crore in March 2024, which was 1.09 crore a year ago. There was an increase of 81 lakhs. This shows that investors are inclined towards small-cap funds.

Increasing trend in small cap funds – Gopal Kavalireddy, vice-president (research), FIRES, said the growth path of India’s economy is attracting more interest from people.

Due to this, many unlisted small-cap companies have started getting support from the capital market. This trend offers promising opportunities to investors with an eye on long-term growth prospects.

Gopal Kavalireddy said factors like general elections, monsoon forecast, economic activity, inflation, GDP estimates and earnings growth for FY 2024-25 could impact valuations of small-cap companies and create volatility in the segment.

Flow of more than 40 thousand crores – Small-cap funds saw inflows of Rs 40,188 crore in FY 2023-24, higher than Rs 22,103 crore recorded in the previous financial year. However, the month of March also saw net sales of Rs 94 crore in small-cap funds for the first time in two years.

According to Association of Mutual Funds in India (AMFI) data, assets under management (AUM) of small-cap mutual funds stood at Rs 2.43 lakh crore at the end of March 2023 and Rs 1.33 lakh crore at the end of March 2022.