Mutual Funds: In May 2025 in India’s mutual fund industry, there was a tremendous decline in the inflow (investment) of large-cap funds. According to the latest data from the Association of Mutual Funds in India (AMFI), investment in large-cap funds fell 53.19% to ₹ 1,250.47 crore in May, compared to ₹ 2,670 crore in April.
This decline has come at a time when both Nifty 50 and Sensex had an increase of about 2%. Although the investment in mid-cap and small-cap funds also slowed down, the most impact has been seen in the larger-cap segment.
Investors’ priority is changing?
Himanshu Srivastava, Associate Director of Morningstar India, said, “Large-cap is not completely ignored, but it does not seem to be the first choice of investors anymore.” According to him, young and new investors are getting attracted by recent lead in small companies, but it is wise that the portfolio remains a balanced part of large-cap.
White Oak Asset Management Cio Ramesh Minister believes that the change in inflow shows the mindset of investors and not the basic strength of the market. He said, “Flow runs the market, not the market.” The minister said that investment in large-cap is usually lump-s (lump sum), while in mid and small-cap comes through SIP.
Where are investors going?
Experts say that direct investment in large-cap funds may have decreased, but investors are investing indirectly through flexi-cap and multi-cap funds.
- Flexi-Cap Funds: About 59–60% of these investments are made in large-cap.
- Multi-cap funds: Of these, about 45–50% of them are large-cap stocks.
Apart from this, passive investment options such as ETF and index funds are also becoming popular for large-cap.
How was the performance of large cap fund?
According to data from Ace Equity, only 45% of large-cap funds (18 out of 33) performed better than benchmark in the last one year. At the same time, only 16 funds in a three -year timeframe and only 8 funds have surpassed benchmarks in five years.
Top Performers (1-Year Performance):
- Motilal Oswal Large Cap Fund – 22%
- DSP Large Cap Fund – 13%
- BNP Baroda Mf – 10.4%
Five years performance:
- Nippon Large Cap Fund – 26%
- ICICI Prudential Bluechip Fund – 24%
Atul Mehra, fund manager of Motilal Oswal AMC, said, “People think that the return in large-cap is low, while we have shown 23% alpha in our fund. Fund manager’s job is to recognize and benefit.”
Is the larger-cap left behind?
Narendra Solanki, Head of Equity Research of Anand Rathi, says that some sectors (eg banking and IT) have had a recent lethargy, but the large-cap still offers value. According to him, the speed in the mid-and small-cap is a sector-theme based. Such as companies benefiting from pli, electronics manufacturing and railway sector.
Ramesh Minister also believes that the current boom of small and mid-cap should not be too excited. He said, “It is not clear that these segments beat large-cap continuously. At present, large-cap companies are trading at about 20% discount, which makes them attractive in terms of valuation.”
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