SMID caps back in focus, outperforming large-caps
Small-& mid-cap saw net inflows of Rs209 bn CYTD, which is 1.7x of inflows in large & multi-cap funds
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New Delhi The sharp surge in inflows into small-& mid-cap funds reflects the increasing risk appetite of investors as macroeconomic factors improve, foreign brokerage Jefferies said in a report.
Mutual fund flows are inclined towards mid-cap/small-caps. Data from AMFI shows that small-cap and mid-cap focused MF saw net inflows of Rs209 billion CYTD; 1.7 times of inflows in large & multi-cap equity funds. Inflows into small-cap funds were up 53 per cent 5mYoY, while flows into mid-cap funds were down 8 per cent; compared to large-cap funds which saw inflows drying up by 95 per cent over the same period.
Small and mid caps are back in favour outperforming large-caps calendar year to date. Mid and Small cap funds have accounted for disproportionate (1.7x of inflows in Large & Multicap) inflows CYTD and trend seems to be holding up.
“We like the SMID space as it has higher share of domestic economy stocks and also 2 times the share of our favourite property/industrial stocks. Large-caps have very few options to play investment cycle and spillover of demand to SMID caps can drive large outperformance”, the report said. Nifty Mid & Small cap have outperformed the large-cap NIFTY-50 index. The outperformance from the SMIDs has been a 2QCYTD phenomenon; with the improvement in macro (RBI pause, inflation falling below 5 per cent, GDP beat) and increasing evidence of a broad-based cyclical recovery being part drivers of the gains for the more domestic-focused stories, the report said.
