{"id":7136,"date":"2025-01-30T05:34:53","date_gmt":"2025-01-30T05:34:53","guid":{"rendered":"https:\/\/blog.certifiedfinancialguardian.com\/?p=7136"},"modified":"2025-01-30T05:34:55","modified_gmt":"2025-01-30T05:34:55","slug":"small-cap-index-has-corrected-good-time-to-invest-in-small-cap-funds-now","status":"publish","type":"post","link":"https:\/\/blog.certifiedfinancialguardian.com\/index.php\/2025\/01\/30\/small-cap-index-has-corrected-good-time-to-invest-in-small-cap-funds-now\/","title":{"rendered":"Small Cap Index Has Corrected. Good Time to Invest in Small Cap Funds Now?"},"content":{"rendered":"\n

The Assets Under Management (AUM) of the Indian mutual fund industry after the “Mutual Funds Sahi Hai”<\/em> campaign, and since the lows of the COVID-19 pandemic, have seen a remarkable increase. It is not just due to the mark-to-market (MTM) gains but also significant inflows from individual investors, i.e. retail and HNIs.<\/p>\n\n\n\n

In CY2024, over 1.05 crore new investors (with unique PAN) were added, which represents a 25% over CY2023 according to the AMFI data. This is the highest edition ever and is despite the markets facing several headwinds and increased volatility.<\/p>\n\n\n\n

A majority of the individual investor folios are in equity-oriented mutual fund schemes and investors are mainly approaching Mid Cap Funds<\/a>, Small Cap Funds<\/a> and Sector & Thematic Funds<\/a>.<\/p>\n\n\n\n

Graph 1:\u00a0Cumulative Net Inflows into Mid Cap Funds, Small Cap Funds, and Sector & Thematic Funds<\/em><\/strong><\/p>\n\n\n\n

\"\"<\/p>\n\n\n\n

#Segment-wise data reported by AMFI from April 2019 onwards
Data as of December 2024
(Source: AMFI, data collated by PersonalFN Research)\u00a0<\/p>\n\n\n\n

Small-cap funds, in particular, have witnessed the highest monthly inflow in the past 18 months. This is because, by and large, Small Cap Funds have demonstrated their ability to generate better returns. However, much of the impressive performance has also come during favourable market conditions.<\/p>\n\n\n\n

Table 1: Small Caps Has Now Noticeably Corrected from the Peak<\/em><\/strong><\/p>\n\n\n\n

\n
\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t
Particulars<\/td>\n\t\t\tS&P BSE SENSEX<\/td>\n\t\t\tS&P BSE Mid-Cap<\/td>\n\t\t\tS&P BSE Small-Cap<\/td>\n\t\t<\/tr>\n\t\t
All-time high (Dates)<\/td>\n\t\t\t26-Sep-2024<\/td>\n\t\t\t24-Sep-2024<\/td>\n\t\t\t11-Dec-2024<\/td>\n\t\t<\/tr>\n\t\t
All-time high level (in points)<\/td>\n\t\t\t85,836.12<\/td>\n\t\t\t49,621.69<\/td>\n\t\t\t57,703.48<\/td>\n\t\t<\/tr>\n\t\t
<\/td>\n\t\t\t<\/td>\n\t\t\t<\/td>\n\t\t\t<\/td>\n\t\t<\/tr>\n\t\t
Level as of Jan 1, 2024 (in points)<\/td>\n\t\t\t72,271.94<\/td>\n\t\t\t37,036.77<\/td>\n\t\t\t42,986.53<\/td>\n\t\t<\/tr>\n\t\t
Level as of Jan 28, 2025 (in points)<\/td>\n\t\t\t75,901.41<\/td>\n\t\t\t41,318.66<\/td>\n\t\t\t47,492.48<\/td>\n\t\t<\/tr>\n\t\t
<\/td>\n\t\t\t<\/td>\n\t\t\t<\/td>\n\t\t\t<\/td>\n\t\t<\/tr>\n\t\t
Correction since the all-time high (%)<\/b><\/td>\n\t\t\t-11.6%<\/td>\n\t\t\t-16.7%<\/td>\n\t\t\t-17.7%<\/td>\n\t\t<\/tr>\n\t<\/tbody>\n<\/table>\n<\/div>\n<\/center>\n\n\n\n

Data as of January 28, 2025
(Source: AMFI, data collated by PersonalFN Research) <\/p>\n\n\n\n

Now the Indian equity market has hit turbulence with the BSE Sensex down nearly 12% and the BSE Small Index nearly 18% since their respective peaks. A variety of factors are at play, such as:<\/p>\n\n\n\n