Large-Cap Mutual Funds See First Outflow In Nearly Three Years As Investors Shift To Small-Cap Schemes

Large-cap mutual funds witnessed their first monthly withdrawal in nearly three years in July, with investors pulling out ₹1,321.69 crore from the category, according to a report by Moneycontrol citing data from the Association of Mutual Funds in India (AMFI).

The outflow reversed the ₹2,067.48 crore inflow recorded by large-cap funds in June. The July decline marked a sharp change of nearly ₹3,389 crore in monthly flows.

AMFI data shows that large-cap funds had not reported significant monthly outflows since September 2023, when the category saw withdrawals of around ₹110 crore. Another outflow was recorded in December 2023, amounting to nearly ₹280 crore.

Investors turn towards mid- and small-cap funds

The shift in investor preference came amid stronger flows into mid-cap and small-cap mutual fund categories. Mid-cap funds attracted ₹6,192.31 crore in July, slightly higher than the ₹6,090.17 crore received in June.

Small-cap funds saw a sharper rise in investor interest, with inflows increasing to ₹7,767.50 crore in July from ₹5,601.96 crore in the previous month. The category recorded a month-on-month growth of 38.7%, while mid-cap fund inflows rose 1.7%.

Equity mutual fund inflows moderate in July

The preference for mid- and small-cap funds came even as overall equity mutual fund inflows moderated in July. Total inflows across equity-oriented categories stood at ₹24,697.39 crore, compared with ₹28,973.41 crore in June.

Apart from mid- and small-cap schemes, flexi-cap funds attracted ₹4,709.08 crore during the month, while large and mid-cap funds received ₹3,425.34 crore.

The divergence in flows indicates that investors continued to favour higher-growth segments despite a broader moderation in equity mutual fund investments.