Small cap and sectoral funds seem to be favourites of retail investors who had entered the stock market after the whole Covid-19 saga. These two particular segments of the mutual fund industry have garnered maximum funds since the time government had begun unlocking the country from the stringest lockdown imposed in the history of the country back in 2020 to curve Covid-19 pandemic cases.
Net asset under management (AUM) of small cap funds has increased 188 per cent to Rs 1.99 lakh crore in October 2023 from Rs 0.69 lakh crore in March 2021.
We have taken into consideration the period from March 2021 to October 2023 because this time frame has been remarkable for equity mutual funds. Retail investors have gone so berserk on equities that, investment in equity mutual funds has been positive continuously since March 2021 on net basis. In this time period, not a single month has seen outflow of money from equity mutual funds on net basis.
As far as, sectoral mutual funds are concerned, the net AUM has jumped 122 per cent to Rs 2.98 lakh crore in October 2023 from Rs 0.98 lakh crore in March 2021.
The net AUM, in case of both small cap and sectoral funds has more than doubled after Covid-19.
Riding on the wave of heavy investment in these two categories of mutual funds, the net AUM of all equity mutual funds combined overall has too almost doubled during the same period. The net AUM of equity mutual funds has jumped 92 per cent to Rs 18.79 lakh crore in October 2023 from Rs 9.79 lakh crore in March 2021.
It will be interesting to see how long retail investors’ newly found love for small cap mutual funds continue or is that the party has just begun for small wonders of the D-Street?
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