Record small-cap fund inflows raise fears of repeat 2024 mistake

People in India who save money sometimes put it into mutual funds, which are baskets of many different investments.

Small-cap funds buy shares of small companies.

These funds became very popular again, and in July 2026 people put a record amount of money into them.

Small companies' stocks have lately done better than big companies' stocks, which makes people excited.

But some experts are worried this has happened before and ended badly.

In 2024, the market watchdog called SEBI asked these funds to run 'stress tests'.

A stress test checks how quickly a fund could sell its shares if everyone suddenly wanted their money back.

The latest tests show funds can sell their shares faster than six months ago, which is a good sign.

However, experts still say small-cap investing is risky and people should plan to keep their money invested for at least five years.

The biggest mistake, they say, is chasing past good returns instead of sticking to a long-term plan.