MC Markets Graphixstory: Are MF investors missing the opportunity in largecap funds?

Buying largecaps at this juncture prove to be a better decision than piling up more units of mid and smallcap mutual fund schemes, analysts believe.

The mutual fund data for December shows that largecap funds saw a net outflow, breaking a two-month trend. With this, the total outflow for FY24 from the largecap fund category has reached almost Rs 5,000 crore.

This is in contrast to flows into midcap and smallcap funds, which continued to be the chosen ones for another month, highlighting the investors' tendency to chase returns.

Nifty midcap 100 and Nifty smallcap 100, which several mutual fund schemes use for benchmarking, have given 57 percent and 72 percent returns this financial year, so far.

The investors continued faith in smalllcaps and midcaps can come to bite them, especially those who are new to these categories, if what analysts believe comes true.

In a Moneycontrol survey conducted in the last week of December, about 51 percent of the analysts and fund managers said they didn't believe that the midcap segment would outperform largecaps, while 54 percent said that smallcaps would not be able to outdo largecaps.

Buying largecaps would prove to be a better decision than piling up more mid and smallcap mutual fund schemes, analysts said.