Archive · 12 Aug 2026
Record small-cap fund inflows raise questions on equity portfolio risk
People who invest in mutual funds in India got some interesting news about July.
A mutual fund is a big basket where many people put their money together to buy stocks and other investments.
Funds that invest in small companies, called small-cap funds, received a record amount of new money - about ₹7,768 crore.
Funds that invest in mid-sized companies also received a lot of money, about ₹6,192 crore.
Meanwhile, funds that invest in big companies, called large-cap funds, saw people take money out for the first time in 30 months.
A financial expert named Subhendu Harichandan says this does not mean everyone should rush to put money into small-cap funds.
He says investors should spread their money across big, mid-sized, and small companies.
He suggests putting 55% into large companies, 25% into mid-sized companies, and 20% into small companies.
He warns against putting most of your money into whatever is trending, because that can be risky.
The best plan is a balanced portfolio that fits your goals and how much risk you can handle.
Small-cap mutual funds attracted a record ₹7,768 crore in July, their highest ever monthly inflow.
Large-cap funds saw their first monthly outflow in 30 months, losing ₹1,322 crore in July.
Mid-cap funds also drew strong demand, attracting ₹6,192 crore during the month.
Overall equity mutual fund flows stayed positive at ₹24,697 crore, with SIP contributions near record levels.
Anand Rathi Wealth's Subhendu Harichandan advises a 55:25:20 large-, mid- and small-cap equity mix rather than chasing inflows.
- Who
- Indian mutual fund investors, with guidance from Subhendu Harichandan, executive director at Anand Rathi Wealth Ltd.
- What
- Small-cap and mid-cap mutual funds drew record or strong inflows in July while large-cap funds saw their first monthly outflow in 30 months.
- When
- July (per data tied to Q1 FY27).
- Where
- India's mutual fund industry.
- Why
- The start of a market recovery and recent corrections created attractive valuations in mid- and small-cap segments, prompting selective rebalancing by investors.
- Small-cap fund inflow (July)
- ₹7,768 crore (record monthly inflow)
- Mid-cap fund inflow (July)
- ₹6,192 crore
- Large-cap fund flow (July)
- −₹1,322 crore (first outflow in 30 months)
- Total equity fund inflows
- ₹24,697 crore
- Q1 FY27 earnings growth - small caps
- 40% year-on-year
- Q1 FY27 earnings growth - mid caps
- 34% year-on-year
- Small-cap negative froth
- 15.1%
- Suggested equity allocation
- 55% large caps / 25% mid caps / 20% small caps