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Domestic Investors Flock to Small, Mid-Cap Funds; Large-Caps See Outflows
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CNBC TV18•22-09-2026, 17:22
Domestic Investors Flock to Small, Mid-Cap Funds; Large-Caps See Outflows
- •Domestic equity mutual-fund inflows surged to –29,330 crore in August, with a notable shift towards small and mid-cap funds, according to Elara Capital.
- •Small-cap funds attracted a record –7,970 crore and mid-cap funds received –6,990 crore in August, while large-cap funds experienced outflows for the second consecutive month.
- •The shift is evident in investor accounts, with small-cap and mid-cap funds seeing the fastest pace of new folio additions since July 2025, contrasting with a decline in large-cap investor accounts.
- •Small and mid-cap funds now constitute 50%-55% of total inflows into actively managed equity funds, a level last observed in 2024.
- •Despite strong headline returns, flow-adjusted returns for top mid-cap and small-cap funds were significantly lower (around 4%) than NAV-based returns (14% and 9.5% respectively), indicating investors may be buying at higher prices.
Key Questions Answered
Small-cap funds attracted a record ₹7,970 crore in August, while mid-cap funds received a record ₹6,990 crore, bringing total domestic equity mutual-fund inflows to ₹29,330 crore.
For the top mid-cap funds, the median annualised NAV return was around 14% through August 2026, whereas the flow-adjusted return, which accounts for the timing of investments, was only around 4%.
Large-cap funds recorded outflows for a second consecutive month and saw a net decline in investor accounts, representing a shift of money towards smaller and mid-sized companies.
