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Both mid-cap and small-cap mutual fund schemes have continued to attract significant investor interest, having garnered about Rs 30,350 crore in inflows during the April-September period of the current financial year. Last year, as data from <keyword id="6359050" type="General" weightage="20" keywordseo="AMFI" source="Orion">AMFI</keyword> showed, the total inflows in both these segments during the same period were only marginally higher at Rs 32,924 crore. Data from Value Research suggests that mid-cap funds have generated 46.25% returns over the past year, while small-cap funds have yielded returns worth 44.17% during the same time. This is far better than their 3-year returns, which stand at 20.67% for midcaps and 21.64% for smallcaps. The returns further moderate over 5 years to 32.44% for small caps and 27.94% for midcaps. Inflows in mid- and small-cap funds have only grown from strength to strength during the current year, despite market watchdog <keyword id="35210" type="General" weightage="20" keywordseo="SEBI" source="Orion">SEBI</keyword> repeatedly highlighting the high risks both these categories entail. Between January and March 2024, small-cap funds saw inflows worth Rs 6,085.27 crore, while mid-cap funds were a little behind, garnering inflows worth Rs 4,887.05 crore. Between April and June this year, small-caps saw inflows worth Rs 7,196.8 crore. At the same time, midcaps saw inflows worth Rs 6,926.60 crore. In line with this increase in inflows, the number of investors (folios) in the two schemes shot up by 1.32 crore year-on-year to nearly 4 crore in the six-month period ended September 30, 2024. Since 2020, the small-cap universe (i.e., companies with a market cap of less than Rs 2000 crores) has grown nearly fourfold, offering investors a wide range of investment opportunities. Data from Trust Mutual Fund also shows that small-cap funds have also emerged as great generators of long-term wealth. Between August 2014 and August 2024, the <keyword id="6354813" type="General" weightage="20" keywordseo="Nifty" source="Orion">Nifty</keyword> 100 total return index (TRI) has yielded a CAGR of 14.7%. In contrast, the Nifty smallcap 250 TRI has registered a CAGR of 18.2% "Small caps will continue to grow at a faster rate for years to come. I expect the inflows to continue as Indians want to invest in the high-growth sectors. Small-cap funds should be seen as an integral part of one's portfolio allocation and not a tactical play," Trust Mutual Fund CEO Sandeep Bagla told PTI. Individually, mid-cap funds saw an inflow of Rs 14,756 crore, and small-cap funds attracted Rs 15,586 crore in the first half of FY25. This aggregates the total inflow to Rs 30,342 crore, the data showed. In addition, the stress test in March 2024 has also played a role, reinforcing confidence by ensuring that fund managers are prepared to handle market volatility, Feroze Azeez, Deputy CEO, Anand Rathi Wealth Ltd, said. "With the mid-cap and small-cap segments projected to grow at 20 percent and 25 percent, respectively, in FY25, we expect inflows to remain strong, especially as SIP inflows continue to hit new peaks," he told media.

Investors pour in Rs 30,350 crore in mid and small cap funds in the first half of 2024

Investors continued to push significant money into sectoral, or thematic funds, with the category seeing inflows worth Rs 18,117.18 crores during August 2024. The inflows in this category remained largely flat last month, changing negligibly from Rs 18,386.35 crores in July 2024. During August, 5 new thematic mutual fund NFOs were launched, which raised a total of Rs 10,093.57 crore. <h2>42nd consecutive month of positive inflows</h2>This takes the total tally of existing sectoral fund schemes to 179. The next category with most schemes offered (42) is <keyword id="103549" type="General" weightage="20" keywordseo="ELSS" source="Orion">ELSS</keyword> (equity-linked savings scheme). Himanshu Srivastava, Associate Director – Manager Research, Morningstar Investment Research India cautioned that investors should be cautious while selecting funds specially from the sector/thematic category. Such funds offer a very high-risk high return investment proposition and may not fit in the portfolio of every investor. "Either investors should themselves understand the dynamics of the underlying sector or theme to take a prudent investment decision, or they should have a strong advice available to them, who can help them take the right decision", he advised. Inflows in small-cap funds tapered significantly, and are now largely in line with funds garnered by large-cap and mid-cap funds. In August, large-cap funds saw inflows worth Rs 2,636.86 crore, while large and mid cap funds amassed Rs 3,293.74 crore. Small-cap funds raked in Rs 3,209.33 crore during the month. "With large cap segment faring relatively better from valuation point of view, investors have shifted their attention towards this category again. Besides, large cap funds add stability to the portfolio during the times of market volatility, and this could be another reason for investors to invest in these funds, given heightened volatility observed in the markets in the recent times. Additionally, with the valuation high in the mid and small cap segments, some shift towards large caps is not surprising", continued Srivastava. Also, investors showed far more proclivity for <keyword id="6357979" type="General" weightage="20" keywordseo="Mutual-Funds" source="Orion">mutual funds</keyword> spread over various market caps, as opposed to a single one. This is evident in the amount garnered by flexi-cap funds, which amassed Rs 3,513.16 crore. All in all, the equity segment saw total inflows of Rs 34,302.82 crores in August, making it the 42nd consecutive month of net inflows in this segment. Even the number of folios in equity jumped 3.16%, up from Rs 13.8 crore in July to Rs 14.3 crore in August. In hybrid funds, balanced advantage funds saw inflows worth Rs 3,215.06 crore, while multi-asset allocation funds received Rs 2,826.89 crore. <h2>Debt inflows take a dip</h2>As for debt categories, they saw inflows worth Rs 45,169.36 crore during the month, higher than their equity counterparts. However, this was significantly lower than the inflows it registered in July, which stood at Rs 1,19,587.60 crore. The biggest contributors to this quantum were <keyword id="428654" type="General" weightage="20" keywordseo="liquid-funds" source="Orion">liquid funds</keyword> and overnight funds, which received Rs 13,594.87 crore, and Rs 15,105.93 crore respectively. And despite various PSU stocks having a good run on the bourses, banking and PSU funds saw outflows worth Rs 1,549.99 crores, the highest in debt segment. Nehal Meshram, Senior Analyst, Research, Morningstar Investment Research India highlighted that overnight funds, liquid funds and money market funds accounted out 86% of the overall debt inflow last month. "This trend reflects a preference for low-risk and highly liquid investment options. Investors also showed a preference for categories with shorter maturity profiles, such as short term, corporate bond and ultra short duration funds, for temporary parking of funds. Medium duration funds, which had consistently seen outflows, reported marginal inflows in August for the first time in 15 months", she explained. During the month, about 63,93,602 new SIPs were registered.

Sectoral funds rake in Rs 18,117.18 crore during the month, debt schemes see more inflows than equities, notes AMFI data for August

Mutual funds stress test: What it means for you

<ul><li>Small caps have outperformed over the last three years or so and it is natural that there may be some time or price correction. </li><li>Experts say that for any investor 10-15% is a reasonable allocation to <keyword id="497338" type="General" weightage="20" keywordseo="small-cap-funds" source="Orion">small cap funds</keyword>. </li><li>If return expectations are reasonable, then small cap funds may continue to do well, albeit with higher <keyword id="77900" type="General" weightage="20" keywordseo="volatility" source="Orion">volatility</keyword>. </li></ul>Small cap funds had a 2023 to remember. The one-year <keyword id="6374680" type="General" weightage="20" keywordseo="returns" source="Orion">returns</keyword> of small cap funds in this period was a whopping 42.79%, the highest of any equity mutual fund category. To put it in context, large cap funds, in comparison, gave returns of 24.92%. If one looks at flows, small cap funds witnessed an inflow of <a href="https://www.businessinsider.in/personal-finance/news/retail-investors-come-of-age-in-2023-with-small-and-midcap-funds-outperforming/articleshow/106339303.cms">₹3,699.24 crore in November,</a> slightly below the ₹4,495.13 crore seen in October. June marked a peak for these funds, recording a remarkable ₹5,472 crore inflow, maintaining the highest inflow among equity fund categories for three consecutive months. The uptrend is propelled by the ongoing economic recovery, boosting earnings for smaller high-growth potential companies. Investors have exhibited optimism about these firms' future, driving their interest in small-cap funds. The AMFI chairman attributed this trend to a recency bias, reflecting investors' focus on recent events or performance. The big question: Should you invest in small cap funds now? Dalal Street has been seeing a bull market for a while now. However, come 2024, market gurus expect the pace to cool off a bit at least till the general elections later in summer. So, as they say, good times may last, but there is no guarantee of the same. Going ahead, small cap funds may not give the kind of returns that they gave in 2023. Which brings us to the all-important question. The <keyword id="35199" type="General" weightage="20" keywordseo="stock-markets" source="Orion">stock markets</keyword>, especially small caps have performed very well over the last three years or so, so it is natural that there may be some time correction or price correction. If you have SIPs in small caps should you continue? The world of small caps is very large and there may be pockets of opportunity that may linger which the fund manager can find for you and which will give reasonable returns going forward. “For any investor we think 10-15% is a reasonable allocation to small cap funds. If you do not have that allocation, you should continue with your SIPs,” says Chirag Mehta, CIO, Quantum AMC. You can even increase your exposure to the small funds category. If the exposure to small-cap funds is very skewed, one may look at rebalancing Given the run-up in small cap funds, if one’s allocation to small-cap funds is very skewed, one may look at rebalancing their <keyword id="27676" type="General" weightage="20" keywordseo="portfolio" source="Orion">portfolio</keyword>. “In that case, you take money off the table, book profit and pay taxes. Or you can change your incremental allocation and use that to rebalance your portfolio,” says Mehta. Agrees Chandraprakash Padiyar, senior fund manager Tata Mutual fund, “Asset allocation is certainly the most important part in any portfolio. Whenever asset allocation skews towards one particular part of the market, because of appreciation, there is certainly a case to rebalance.” Temper return expectations If return expectations are reasonable, then small caps as a category may continue to do well. In the last 5 years small cap funds as a category has given returns of 24.72%. “All of us are optimistic about small cap funds in the medium to the long term, but in the next one to two years the incremental return expectations need to be in line with a 10-15 years kind of return and not what has happened in the last 3-5 years. If return expectations are reasonable then small cap funds may continue to do well, albeit with higher volatility,” says Padiyar. So investors should not expect a similar performance in the next two years, but relatively lower returns. Do not abandon small-caps altogether Given the large opportunity, you should not abandon small cap funds alothether. “Currently on a historical valuation basis small caps may appear slightly expensive than the large caps, but if you see the earnings growth in the segment, it is significantly larger as well. So from an opportunity standpoint you should not miss out and say that I should exit now,” says Mehta. Hence , an investor should not exit the category fully.” Manufacturing is a big theme for India for the next 5-10 years. If these businesses were to scale for the next 3-5 years then this segment genuinely makes a lot of sense for the long term. Investors investing in small cap funds should take a long term view,” says Padiyar. Summing up Small cap funds are more risky than any other equity fund, so when investing in small cap funds, you do not just look at the past track record, but also at other safeguards the fund has, for example, what proportion of allocation they have as a market cap of the company, what is the liquidity profile of the investments they have got into and so on. It is important not to be carried away by the momentum you see in the segment, but if you do not have adequate exposure, you should not miss out.

Bull market with eye on election – Should you invest in small cap funds now?

New Delhi, Strong, incessant net flows and favourable market conditions propped up the assets base for the small-cap mutual fund category to cross Rs 2 lakh crore mark in November-end, a sharp surge of 69 per cent from a year earlier. On a month-on-month basis, the Assets Under Management (AUM) of the category grew 10 per cent to Rs 1.99 lakh crore, data with the <keyword id="826589" type="General" weightage="80" keywordseo="association-of-mutual-funds" source="Orion">Association of Mutual Funds</keyword> in India (AMFI) showed. Since the fourth quarter of 2019-20, the AUM for the category has seen a phenomenal rise, due to favourable market movement, along with record net inflows. Small-cap funds attracted Rs 37,178 in this year (till November). This includes Rs 3,699 crore last month and a record fund infusion of Rs 4,495 crore in October. On the other hand, the large-cap category saw a pull out of Rs 2,688 crore in the first 11 months of this year. "A few fund houses have limited the inflows in their small-cap funds over the last quarter given the sharp rise in flows and concerns on valuations," <keyword id="112974" type="General" weightage="80" keywordseo="morningstar-india" source="Orion">Morningstar India</keyword> had mentioned in its September quarterly report. Going by the AMFI data, the asset base of the small-cap mutual fund hit its peak of Rs 2.2 lakh crore at the end of November. Additionally, investor accounts in the category, too, climbed a staggering 62 lakh folios to 1.6 crore in November from 97.52 lakh a year-earlier. This shows that investors have become more inclined toward small-cap funds. Under Sebi's rule, in small-cap mutual funds, fund managers are required to invest at least 65 per cent of their portfolios in small-cap stocks. <keyword id="2252616" type="General" weightage="80" keywordseo="g-pradeepkumar" source="Orion">G Pradeepkumar</keyword>, CEO, <keyword id="6536298" type="General" weightage="80" keywordseo="union-asset-management-company" source="Orion">Union Asset Management Company</keyword>, suggested that investors stagger their investments in small- and mid-cap funds in view of the possibility of short-term volatility. Overall, the AUM of the 42-player mutual fund industry reached Rs 49.04 lakh crore in November-end from Rs 40.37 lakh crore in November 2022, suggesting a gain of 22 per cent.

Consistent inflows push small-cap funds AUM past Rs 2 lakh cr mark in Nov

<ul><li>When building a MF <keyword id="27676" type="General" weightage="20" keywordseo="portfolio" source="Orion">portfolio</keyword>, defining clear goals is essential. </li><li>An investor needs to keep in mind what kind of risk taking ability he/she has. </li><li>An investor should know his/her investment horizon and see if it aligns with that of the fund. </li></ul>More and more Indian investors are believing in the slogan often heard during the ongoing ICC World Cup 2023 telecast – ‘<keyword id="6357979" type="General" weightage="20" keywordseo="mutual-funds" source="Orion">Mutual Funds</keyword> Sahi Hain’. According to data by Association of Mutual Funds in India (AMFI) in October, ₹16,928 crore (approx $2 billion) flowed into SIP accounts, adding up to a total inflow of ₹1.75 lakh crore over the preceding twelve months. In October 2022, it stood at ₹13,040 crore. With over 44 registered mutual fund houses in India and a wide variety of fund categories, it is not easy to construct a mutual funds portfolio that is suitable for one’s needs. Here we take a look at some key factors that will help you build a mutual funds portfolio and select the categories of funds to invest in. <cmsannotation type="cmsannotation" annotationid="Constructing a portfolio" comment="Subhead" text="Constructing a portfolio">Constructing a portfolio</cmsannotation> When designing and then constructing one’s mutual fund portfolio, there are three crucial factors to consider. “First, age plays a significant role in determining the investment strategy. Second, defining clear financial goals is essential – whether it's retirement planning or funding your child's education, specifying when these goals should be met is key. Lastly, one must assess their risk tolerance,” says Soumya Sarkar, Co-Founder, Wealth Redefine, a mutual funds distribution firm. For example, when you are in your 30s or 40s, there is still a long time to go for retirement, so you can have a greater portion of your portfolio invested in equity funds, but when you are near to a goal like child’s education or retirement, you should make a shift to debt because capital preservation becomes important. “While age and goals are important, the emphasis should largely lean towards risk tolerance, accounting for around 60% of the decision-making process. Understanding how comfortable one is with potential fluctuations in the market is paramount, as it guides the selection of mutual funds that align with their risk profile,” says Sarkar. The remaining 40% should factor in age and goal timelines to craft a well-balanced mutual fund portfolio that suits individual financial aspirations and risk appetite. <cmsannotation type="cmsannotation" annotationid="Deciding on the type of mutual fund to invest in" comment="Subhead" text="Deciding on the type of mutual fund to invest in">Deciding on the type of mutual fund to invest in</cmsannotation> It all starts with asset allocation and depends on the individual, his preference and his requirements. Shaily Gang, Head-Products, Tata Mutual Fund, explains. Let us say someone decides 70:30 in equity and debt. Within that 70% if someone is very aggressive and has the horizon and has the capacity to take volatility then one can go very aggressive on thematic, sector and small cap funds, which could total to 35% of that 70%. The rest of the 65% of the 70% of equity allocation will be formed by diversified funds. Someone else with a high risk appetite may decide to invest 50% of his equity exposure into <keyword id="509662" type="General" weightage="20" keywordseo="large-cap-funds" source="Orion">large cap funds</keyword> and another 50% in small cap funds. However, it is advised that if a person has a horizon of three to five years, <keyword id="882925" type="General" weightage="20" keywordseo="hybrid-funds" source="Orion">hybrid funds</keyword> like equity savings funds and balanced advantage funds, are a good option because they carry less risk than pure equity funds. “So an investor needs to keep in mind what kind of risk taking ability he has, his horizon for that part of the investment and also map that to the horizon of the fund. For example, if someone has a high risk taking capacity and the investor has a horizon of beyond five years, then he can invest in a small cap fund,” says Gang. <cmsannotation type="cmsannotation" annotationid="Making the most of market trends?" comment="Subhead" text="Making the most of market trends?">Making the most of market trends?</cmsannotation> Predicting specific market periods is challenging, as rallies can be unpredictable. “Investors can use various parameters to make informed decisions, such as the price-to-earnings ratio, price-to-book value, standard deviation, and rolling returns in mutual funds,” says Sarkar. Rolling returns indicate how fund managers have performed over different time frames, providing insights into potential future performance. While not always foolproof, these metrics are often reliable. Should a sector remain undervalued over an extended duration, there exists a probability that it will eventually exhibit strong performance, irrespective of whether it falls into the large-cap, mid-cap, or small-cap category. This positive performance has the potential to yield favourable returns for investors. “Currently small cap valuations are attractive. Let’s say that when markets are heated small caps trade at 40-50% of the large caps but currently they are trading at 5% premium. So they are very reasonably valued. One would need to visit all of these things before making a decision,” says Gang. To sum up, although accurately timing market periods is challenging, slightly evolved investors can utilise these metrics to make informed decisions and potentially capitalise on rallies specific to particular sectors.

Seek to build a healthy mutual fund portfolio? Key things to keep in mind

<ul><li>If you are looking at equity funds that deliver superior returns, look no further. Here are the top 20 equity funds collated by Value Research.</li><li><keyword id="5647500" type="General" weightage="20" keywordseo="BHARAT-22-ETF" source="Orion">BHARAT 22 ETF</keyword> and ICICI Prudential BHARAT 22 FOF were on the top of the list as they delivered 28% returns in the last one year.</li><li>Another analysis of the report shows that most funds in the top performing list were from the mid cap category.</li></ul>Mutual funds have been witnessing record inflows by investors every month, thanks to the systematic investment trend that is now a savings pattern of retail investors. This is applaudable because it is happening at a time when foreign institutional investors are selling Indian stocks aggressively, which fortunately did not impact domestic investors. Inflows into <keyword id="15961802" type="General" weightage="20" keywordseo="equity-oriented-mutual-funds" source="Orion">equity oriented mutual funds</keyword> hit a nine-month high in February with an infusion to the tune of ₹15,686 crore. The inflows stood at ₹12,546 crore in January, as per Association of <keyword id="864677" type="General" weightage="20" keywordseo="Mutual-Funds-in-India" source="Orion">Mutual Funds in India</keyword> (AMFI) data. High inflows were seen in thematic and <keyword id="497338" type="General" weightage="20" keywordseo="small-cap-funds" source="Orion">small cap funds</keyword> at ₹3,856 crore and ₹2,246 crore respectively. Mutual funds’ <a href="https://www.businessinsider.in/stock-market/news/mutual-funds-raise-bets-on-mid-small-cap-stocks-amid-volatile-markets/articleshow/98516460.cms">interest in mid and small caps has been growing </a>in the last three quarters. In fact, mutual fund categories that have performed relatively better include small, mid and thematic funds. Here are the top 20 equity funds collated by Value Research report on ‘Best Funds for wealth, income, short term goals and tax saving 2023’ as per their performance in the last one year. BHARAT 22 ETF and ICICI Prudential BHARAT 22 FOF were on the top of the list as both delivered 28% returns each to investors in the last one year. ICICI Prudential BHARAT 22 FOF is a fund-of-funds scheme that tracks BHARAT 22 ETF. Bharat 22 ETF was introduced by the government in the Union Budget 2017 as a vehicle to achieve its divestment target. The index is collectively comprised of 22 stocks of central public sector enterprises (CPSE), public sector banks and private companies which are strategic holding of specified undertakings of unit trust of India (SUUTI). Another analysis of the report shows most funds in the list were from the mid cap category that have higher returns. Note that interest in <a href="https://www.businessinsider.in/stock-market/news/mutual-funds-raise-bets-on-mid-small-cap-stocks-amid-volatile-markets/articleshow/98516460.cms">mid caps has been growing </a>in the last three quarters as it saw inflows of ₹14,632 crore at a time when large-cap funds witnessed inflows worth less than half of it at ₹6,392 crore in the last three quarters. <div type="image" title="Top 20 equity funds (1)" msid="99388894" hostid="261"></div>Source: Value Research Meanwhile, the bottom 20 funds that have delivered poor returns in the last one year included most of the small and flexi cap stocks. This comes at a time when markets have been extremely volatile in the last one year due to high inflation and macroeconomic challenges. This led to heavy outflows in stocks that couldn't stand through the testing times. Nifty Smallcap 100 index has lost 15% in the last one year while Nifty Midcap 100 lost 2.38%. <div type="image" title="Bottom 20 equity funds" msid="99388896" hostid="261"></div>Source: Value Research SEE ALSO: <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/finance/news/india-to-double-its-economy-to-7-trillion-by-2030/articleshow/99381185.cms">India set to be a $7 trillion economy by 2030, powered by triple engines of rapid financialisation, clean energy transition and digital revolution</a> <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/stock-market/news/fpis-offload-it-oil-gas-stocks-worth-13734-crore-in-march/articleshow/99375107.cms">FPIs offload IT, oil &amp; gas stocks worth ₹13,734 crore in March; remain net sellers of Indian stocks for 2 years running</a>

Super 20 equity funds that have managed to not only beat benchmarks but delivered the best returns in the last one year

Wasatch Global Investors<ul class="summary-list"><li>Ken Korngiebel's Wasatch Micro Cap Fund beat 99% of its peers in 2019, and it's consistently stayed ahead of its peers throughout the last two decades. </li><li>Korngiebel is investing in companies that might have a short track record and depend heavily on a few key people.</li><li>He told Business Insider he makes sure he's getting his calls correct by zeroing in on these four areas.</li><li><a href="https://www.businessinsider.com/?hprecirc-bullet">Visit Business Insider's homepage for more stories</a>.</li></ul>It's survival of the fittest in <a href="https://www.businessinsider.com/best-small-cap-stock-picks-mutual-fund-manager-ken-korngiebel-2020-1">Ken Korngiebel</a>'s portfolio.When he took over as manager of the <a href="https://www.morningstar.com/funds/xnas/wmicx/quote">Wasatch Micro Cap Fund</a> in 2017, he decided he wanted to shrink it. He's reduced the number of stocks in his portfolio to 75. And now that it's more concentrated, he won't add a new stock to the fund unless it's clearly better than one he already holds."There's always competition for capital," he told Business Insider in an exclusive interview. "A new idea needs to compared with an existing idea to see what might be better going forward."That's helped him raise the level of a fund that was already highly successful. The micro cap fund beat 99% of competing funds in 2019. Kiplinger ranks it as one of the <a href="https://www.kiplinger.com/tool/investing/T041-S001-top-performing-mutual-funds/index.php?table_select=SmStock">10 best small-cap mutual funds over the past three, five, 10, and 20 years</a>. It's also picked up a five-star rating from Morningstar along the way.The small-cap landscape is a broad one and Korngiebel can't hang on to many companies that outgrow it, so the competition is intense.He explained that he's always looking for these four qualities before he adds a company to his fund.<h2>(1) Revenue growth</h2>"Revenue growth is where I start," Korngiebel said. "Without topline growth, ultimately you run out of bottom line growth."His portfolio is filled with two kinds of companies: Steady, mature businesses that are posting revenue growth in the mid-single digits, and companies that might be at an earlier stage, but are posting sales growth of 20% to 40% a year.For the latter group, he says it's vital that they're growing under their own power and not just snapping up their competition. "When you're dealing with micro caps and small caps, the types of stocks that we're looking for that can go on to be big companies, it begins with revenue growth and particularly organically," he said.<h2>(2) Economic power</h2>Korngiebel spends a lot of time examining companies that are in early stages of development, and when he does buy a stock, he expects to hang onto the stocks for five years. So he wants to know everything he can about the company's margins, profitability, competition, and how they might evolve over that time."Understanding the core economics of the business in terms of what's the margin profile today (and) what would that margin profile look like at more revenue scale" is critical, he said. "We want to understand the competitive intensity of the industry, because that directly influences how much market share a company is going gonna take and therefore what the future profitability of the firm looks like."<h2>(3) Outstanding management</h2>"This is a part of the market which is, I think, really dependent on your assessment of management because these aren't big companies," Korngiebel says. "The benches aren't as deep."When he's enthusiastic about a company, an exceptional management team is always a major reason. And he says he goes into a lot of depth in examining those companies."I have on a retainer a former investigative journalist who conducts background due diligence and interviews of former employees to help us understand certain questions we might have about any particular executive," he said.<h2>(4) Disruption</h2>"You're looking for companies that have innovative products, technologies that map on to large markets that have great business models," Korngiebel said of his highest-upside investments.At the end of 2019 a whopping 57% of his holdings were in either healthcare or technology companies. He says he targets those two industries because they're the best places to find the kinds of groundbreaking new technologies he can invest in.Combined with the other data he's gathered, that gives him a good idea about the trajectory of the companies he's evaluating."We can make some pretty educated forecasts about competitive environment with the likelihood is of capturing market share, significant revenue growth and ultimately cashflow and profitability," he said. <h3>NOW WATCH: <a href="https://www.businessinsider.com/oscars-academy-awards-rigged-best-picture-nominations-win-2019-2">There's a formula to winning the Oscars, and it's all in the statistics</a></h3>

The lead manager at the world's top-ranked small-cap fund crushes peers in the riskiest part of the market. He reveals the 4 attributes he looks for in a stock pick.

Wasatch Global InvestorsKen Korngiebel manages the Wasatch Micro Cap fund, the number-one small-cap mutual fund of the past 20 years.<ul class="summary-list"><li>Ken Korngiebel heads the <a href="https://www.morningstar.com/funds/xnas/wmicx/quote">Wasatch Micro Cap</a> fund, which has consistently crushed its peers for years and is the top-rated small-cap stock fund of the past 20 years, according to Kiplinger.</li><li>Korngiebel told Business Insider he has a "Do Not Touch" list of winning stocks he has no plans to sell even though they've enjoyed huge runups.</li><li>Because of the rules of his fund and the nature of small-cap investing, Korngiebel generally invests with a five-year time horizon. But there are a few companies he says he could hold "forever."</li><li><a href="https://www.businessinsider.com/?hprecirc-bullet">Visit Business Insider's homepage for more stories</a>.</li></ul>Successful investors might have strict rules, but they also know it's worth making an exception if it's great enough.At the <a href="https://wasatchglobal.com/wasatch-micro-cap-fund/">Wasatch Micro Cap fund</a>, Ken Korngiebel has to invest at least 80% of his money in small companies - generally ones valued at $1.5 billion or less. For the most part that means he's buying stocks based on what he expects over the next five years.But a few are going to stick around long after they outgrew that designation. He says they've earned a spot on his "Do Not Touch" list because their growth means that if he sells the shares, he can't buy them back later. While he often sells winners when the time is right, he has no plans to part with them.Korngiebel, who has run the fund since 2017, is taking over from a long line of winners himself: Kiplinger ranks Wasatch Micro as the <a href="https://www.kiplinger.com/tool/investing/T041-S001-top-performing-mutual-funds/index.php?table_select=SmStock">best small-cap fund of the past 20 years</a>. He's maintained that level, with a five-star rating from Morningstar over the past few years. The fund beat 98% of its peers last year with a 42.2% return. "I would hold indefinitely if it's a company I love and think is a future dominator," he told Business Insider in an exclusive interview. "If we can hold forever that would be awesome, and so long as that investment thesis is intact, then we're going to hold the stock."Here are three of those stocks, and the reasons he is still enthusiastic about each. In addition to being optimistic about their growth and future profits, Korngiebel highlights their management teams as a key reason for these investments.<h2>(1) Five9</h2><a href="https://markets.businessinsider.com/stocks/fivn-stock">Five9</a> provides cloud software for call centers, and its stock is up 1,676% in the last five years to bring its valuation to more than $4 billion, well out of small-cap range.Korngiebel says it's doing a very good job managing the complex transition of becoming a larger company, praising Chairman Mike Burkland, who was CEO for almost a decade, and recent replacement Rowan Trollope. And he thinks Five9 has room for a lot of dramatic growth."It's a market that has been slow to adopt the cloud. It's probably 10% to 15% penetrated, so there is a large installed base that still needs to migrate from on-premise to the cloud," he said. "It's got fantastic economics to the business model. It's got a great management team. And it's got less competitive intensity now than it was, say, four or five years ago. That's an example of characteristics that I would die to invest in all day long."<h2>(2) Medallia</h2><a href="https://markets.businessinsider.com/stocks/mdla-stock">Medallia</a> makes software that helps companies track the satisfaction of their customers and their employees, and Korngiebel says companies are only beginning to realize how vital that data is."This is, I think, a really exciting, huge market that has burst onto the scene in the last four or five years," he said. "They're seen as mission critical because this directly influences the revenue growth and the customer retention metrics that are so important to maintaining a healthy business."Within that growing industry, he says the company has built up a big advantage by winning numerous big banks and airlines as customers, making it "the leader by far" in its industry.Korngiebel says he first invested in the company before it went public at about $6 per share, far below its IPO price of $21 and its current level of $30. One reason for that is his belief in the track record of CEO Leslie Stretch."The best predictor of future success is past success," he said. "Looking at somebody's track record of accomplishment, I think, is important to understand what the likelihood of future success would be."<h2>(3) FreshPet</h2>Shares of pet food retailer <a href="https://markets.businessinsider.com/stocks/frpt-stock">FreshPet</a> have rocketed about 700% in four years. Korngiebel says it helps that pets love the product, but another reason is the "phenomenal" management team including CEO Billy Cyr and president Scott Morris, who have successfully increased awareness of their brand and gotten customers to spend more - with a lot of room for improvement remaining."This is an example of a management team that is more skilled than the market cap of the company at the time we invested in it," he said. "When we bought it, the debate was can they get to $300 million [in revenue], and the market had its doubts. Then it was $500 million. And now the debate is, is this a $1 billion-plus annual revenue opportunity?" <h3>NOW WATCH: <a href="https://www.businessinsider.com/why-camel-milk-is-so-expensive-2019-12">Camel milk can cost $30 a litre. Why is it so expensive?</a></h3>

Ken Korngiebel manages the best small-cap fund of the last 20 years, making his living in the riskiest part of the market. Here's how he does it - and the 3 stocks he'll never sell.

The <keyword id="20340200" type="General" weightage="100" keywordseo="assets-under-management" source="keywords">Assets Under Management</keyword> (<keyword id="20019621" type="General" weightage="20" keywordseo="AUM" source="keywords">AUM</keyword>) of <keyword id="20300870" type="General" weightage="20" keywordseo="equity-mutual-funds" source="keywords">equity mutual funds</keyword> have <keyword id="20641508" type="General" weightage="20" keywordseo="surged" source="keywords">surged</keyword> by 5.37 per cent sequentially to Rs 25,12,845.59 crore in July 2024 from Rs 23,84,727.69 crore in June 2024, <keyword id="22838645" type="General" weightage="20" keywordseo="PL-Wealth-Management" source="keywords" meta.keywordsubtype="org" meta.entityname="PL Wealth Management" meta.hostid="261" meta.entityid="PL Wealth Management">PL Wealth Management</keyword> said in a statement. The observation, which is based on 283 open-ended equity diversified funds, cited that 39 per cent of these funds have outperformed their respective benchmarks over the past month, ending July 31st, 2024, The cumulative total of funds that outperformed stood at 109 during the month ending July 2024 (one month). AUM measures the total market value of assets that a person or entity manages for clients or on behalf of investors. Under the <keyword id="21184260" type="General" weightage="20" keywordseo="large-cap-funds" source="keywords">large-cap funds</keyword>, about 58 per cent of <keyword id="19915334" type="General" weightage="20" keywordseo="schemes" source="keywords">schemes</keyword> outperformed on S&amp;P BSE 100 - TRI benchmark, out of 31 schemes observed by <keyword id="19999821" type="General" weightage="20" keywordseo="Prabhudas-Lilladher" source="keywords" meta.keywordsubtype="org" meta.entityname="Prabhudas Lilladher" meta.hostid="261" meta.entityid="Prabhudas Lilladher">Prabhudas Lilladher</keyword>'s wealth management arm. About 24 per cent of schemes outperformed under the large and mid-cap funds, of which 29 were observed. Under the multi-cap funds about 40 per cent of schemes outperformed, whereas in the flexi-cap funds, the percentage of schemes outperforming was 33 per cent. Going further, about 38 per cent of schemes under the midcap outperformed. Interestingly, the data observed that not a single scheme in small-cap funds manages to outperform their respective benchmarks. According to the observations made by L Wealth Management, Value Contra Div Yield Funds was the best-performing category, where 78 per cent of the schemes outperformed the benchmark. It was followed by schemes of large-cap funds and multi-cap funds, which outperformed their respective benchmarks by 58 per cent and 40 per cent respectively, during July 2024. Large and mid-cap funds were the least performing fund category, with only 24 per cent of funds outperforming the benchmark, as shown in the analysis. <keyword id="22838646" type="General" weightage="20" keywordseo="PL-Capital-Group" source="keywords" meta.keywordsubtype="org" meta.entityname="PL Capital Group" meta.hostid="261" meta.entityid="PL Capital Group">PL Capital Group</keyword> specialises in research-driven advisory services in the Indian capital markets. The company's business is spread across 200 plus cities in India, catering to institutions, corporations, family offices, HNIs, and retail clients in India and globally.

Assets Under Management of equity mutual funds surged 5.4% sequentially in July: PL Wealth Management

<keyword id="19896016" type="General" weightage="20" keywordseo="new-delhi" source="keywords">New Delhi</keyword>, Equity mutual funds experienced a net inflow of Rs 21,780 crore in January, making it the highest monthly infusion in nearly two years, propelled by investors' continued preference for small-cap funds. In comparison, an inflow of around Rs 17,000 crore was seen in the category in December, according to the data released by the <keyword id="20090034" type="General" weightage="20" keywordseo="association-of-mutual-funds" source="keywords">Association of Mutual Funds</keyword> in <keyword id="19895063" type="General" weightage="20" keywordseo="india" source="keywords">India</keyword> (<keyword id="6359050" type="General" weightage="20" keywordseo="amfi" source="Orion">AMFI</keyword>) on Thursday. The flow in January was the highest since March 2022, when equity-oriented mutual funds witnessed an inflow of Rs 28,463 crore. Also, the latest flow marks the 35th consecutive month of net inflows in equity funds. Barring value fund, all categories experienced inflow in equity segments. The category was aided by fund collection to the tune of Rs 4,805 crore in thematic funds, followed by Rs 3,257 crore in small-cap funds and Rs 3,039 crore in multi-cap funds. The highlight of this month was the fund flows into the large-cap category at Rs 1,287 crore, which was at the highest-level in more than 13 months. "With midcaps at 15 per cent and small caps at 20 per cent premiums, investors are realising the considerable valuation gap with the large-cap segment, and accordingly making adjustments to their investments. "Though small-cap funds garnered greater than Rs 3,000 crore of net flows for the fourth consecutive month, the quantum was lower by Rs 600 crore on a month-on-month basis," <keyword id="20504519" type="General" weightage="20" keywordseo="gopal-kavalireddi" source="keywords">Gopal Kavalireddi</keyword>, Vice President of Research at FYERS, said. Apart from equities, debt-oriented schemes witnessed a net inflow of Rs 76,469 crore in January after withdrawing funds in the preceding two months. The segment had witnessed a net outflow of Rs 75,560 crore in December and Rs 4,707 crore in November. Additionally, hybrid schemes saw an inflow of Rs 20,637 crore. Overall, the mutual fund industry has witnessed an inflow of Rs 1.23 lakh crore in the month under review as compared to an outflow of Rs 40,685 crore in December. The strong inflow pushed the mutual fund industry's assets under management to Rs 52.74 lakh crore in January-end as compared to Rs 50.78 lakh crore at the end of December.

Equity mutual fund inflow hits almost 2-yr high of ₹21,780-cr in January

Equity <keyword id="19929240" type="General" weightage="20" keywordseo="mutual-funds" source="keywords">mutual funds</keyword> saw inflows worth Rs 40,537 crore during the month. On the other hand, <keyword id="20671790" type="General" weightage="20" keywordseo="debt-funds" source="keywords">debt funds</keyword> saw outflows to the tune of Rs 1,07,357.62 crores. Out of this, liquid funds saw the maximum outflows of Rs 80,354.03 crores. This is generally attributable to investors withdrawing money to meet their advance tax obligations. Overnight funds also saw outflows to the tune of Rs 25,142.72 crores. <keyword id="20296225" type="General" weightage="20" keywordseo="thematic-funds" source="keywords">Thematic funds</keyword> saw massive inflows of Rs 22,351.69 crore, the highest in <keyword id="20210668" type="General" weightage="20" keywordseo="equity-funds" source="keywords">equity funds</keyword>, and were the investor's favorite during June 2024, as per <keyword id="22344564" type="General" weightage="20" keywordseo="AMFI-data" source="keywords">AMFI data</keyword>. About 50% of the inflows in this category came from 9 new NFOs (new fund offers) in this category, which amassed Rs 12,974 crore. In terms of inflows, multi-cap funds came a distant second, garnering Rs 4,708.57 crore last month. Amidst <keyword id="22344565" type="General" weightage="20" keywordseo="hybrid-schemes" source="keywords">hybrid schemes</keyword>, multi-asset allocation funds, which garnered Rs 3,453.12 crore in June, and Arbitrage funds, which saw inflows worth Rs 3,836.58 crore remained investor favorites. The only hybrid scheme to see net outflows were conservative hybrid funds, which shed Rs 130.57 crore. <h2>Large-cap funds see moderate inflows</h2>Inflows in small cap funds tapered at Rs 2,263.47 crore, slightly below inflows seen by midcap funds, which stood at Rs 2,527.84 crore. However, inflows in large-cap funds sobered significantly to stand at Rs 970.49 crore. Investors clearly took a far greater liking to large and mid-cap funds, which saw inflows worth Rs 2,912.19 crore, which is reflective of investor's growing confidence in the Indian stock market, and their increasing desire to diversify their investments and take risks. As of June 30, 2024, the AUM (<keyword id="20257654" type="General" weightage="20" keywordseo="asset-under-management" source="keywords">asset under management</keyword>) of the Indian mutual fund industry stood at Rs 61.15 lakh crore. It took the MF industry 6 months to cross the Rs 60 lakh crore threshold, from the Rs 50-lakh crore mark. During the month, the number of new MF folios also stood at an all-time high of 19.04 crore. <h2>SIP Inflows at all-time high, <keyword id="20050894" type="General" weightage="20" keywordseo="gold-etfs" source="keywords">Gold ETFs</keyword> glitter hard</h2>SIP inflows for June surpassed the Rs 21,000-crore mark, standing at Rs 21,262 crore, as against Rs 20,904.37 crore in May 2024. Passive mutual funds (ETFs, Index funds) also registered a solid growth, with index funds gathering Rs 5,071.82 crores and other ETFs pulling in Rs 9,134.06 crores. Gold ETFs registered the highest month-on-month growth, gathering Rs 726.16 crore in June. Out of the 17 NFOs which were up for subscription last month, 9 belonged to the thematic fund category, while 2 were index funds. Cumulatively, these NFOs amassed Rs 15,227 crores.

You Searched For "small cap funds" and got 12 results

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