Business News

ET Intelligence group: Investors are moderating bets on small cap stocks amid rich valuations and higher market volatility. The share of small cap funds in the monthly folio addition dropped to 21.3% in February 2024, lowest in 20 months, showed the latest data from the Association of Mutual Fund of India (AMFI). It was at 38% over the past 12 months after peaking at 63% in May 2023. The share has been falling for the past four months.Small cap funds added 79.9 lakh folios over the past 12 months taking the total count to 1.9 crore. It accounted for 15.5% of the total equity funds folio count, the highest among all the categories of equity funds.108631065The small caps funds have also shown moderation in fund flow trend. The share of gross inflow in small cap funds was at a 10-month low of 11.7% in February while the net inflow share was at a 20-month low of10.9%. As a result, the assets under management (AUM) of small cap funds rose by Rs 1468 crore in February, the lowest among major equity fund categories, to Rs 2.9 lakh crore. The gross buy to sell ratio for the small cap funds eased to 1.74, the lowest in 14 months.The small cap category became popular among investors amid a soaring stock market over the past four years. The category’s folio count increased by 38% annually during the period compared with the 18% growth for the total equity folio count. Nearly 40% of the total folio addition in the small cap funds took place in the past year. Of the total equity inflow of Rs 1.8 lakh crore in the past 12 months, 23% was into the small cap funds.