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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

<ul class="summary-list"><li>The recent surge in small-cap stocks appears unsustainable, according to Capital Economics' John Higgins.</li><li>Higgins said the fact that large-cap stocks are still near record highs suggests no rotation has taken place.</li></ul>The <a target="_blank" class="" href="https://markets.businessinsider.com/news/stocks/stock-market-rally-broadens-small-caps-another-win-for-bulls-2024-7">rapid and historic rally in small-cap stocks</a> over the past week is unsustainable.That's according to Capital Economics' chief market economist John Higgins, who said in a note on Wednesday that the relative outperformance of small-cap stocks compared to large-cap stocks is likely to be short-lived."A recent surge in the Russell 2000 after the US CPI report for June was published last week has prompted claims that we are entering the initial stage of a secular rotation into US small-cap stocks. We are not convinced," Higgins said.First, Higgins said the recent market action shouldn't be thought of as a rotation.A rotation implies that investors are selling large-cap stocks and using those proceeds to buy small-caps. But while large-caps have sat out the rally over the past week, they are still just a few percentage points below all-time highs."We would need to see more evidence of a sell-off in 'big tech' to be convinced that a rotation into small-cap stocks out of their larger counterparts was well and truly underway," Higgins said.Higgins made those comments while acknowledging <a target="_blank" class="" href="https://markets.businessinsider.com/news/stocks/nvidia-stock-price-tighter-china-trade-restrictions-tsm-asml-nvda-2024-7">the sharp decline in mega-cap tech stocks on Wednesday,</a> sparked by comments from former President Donald Trump and the Biden administration considering restrictions on certain semiconductor companies.Much of the rally in small-cap stocks has been driven by the expectation that the Federal Reserve will soon lower interest rates.But Higgins isn't buying that argument either, noting that large-cap stocks outperformed their small-cap peers when the Fed cut interest rates in the mid-1990s, as well as when they cut interest rates in 2009 and 2019."We anticipate a bubble in the stock market continuing to inflate amid hype around AI, like one did in the second half of the 1990s around the internet. Back then, small-cap stocks generally underperformed their large-cap peers until mid-1999," Higgins said.Finally, Higgins highlighted that the biggest factor driving stock market performance is earnings, and there's no sign yet that small-cap stocks are going to overtake large-cap stocks in terms of earnings growth."It remains to be seen whether big tech firms will fail in general to continue to beat analysts' lofty expectations for their earnings," Higgins said.The first round of second-quarter earnings results for the mega-cap tech companies are set to drop next week with reports from Tesla and Alphabet.While Higgins isn't yet buying into the small-cap stock rally, Fundstrat's Tom Lee is.The strategist <a target="_blank" class="" href="https://markets.businessinsider.com/news/stocks/small-caps-russell-2000-rally-outlook-sp500-selloff-fundstrat-tech-2024-7">told clients on Tuesday that he still sees a 40% rally occurring</a> in small-cap stocks after they've largely sat out the broader stock market rally this year."We have small caps even more oversold and valuations — whether you look at medium P/E, which is now at 10 times 2025 earnings — even lower," Fundstrat's Tom Lee told <a target="_blank" rel=" nofollow" href="https://www.youtube.com/watch?v=VyHto5WWQ0k">CNBC</a>. "So we think that this move could be something like 10 weeks and as much as 40%. So I think it is just starting."

Why the stock market's rotation into small-caps will be short-lived

<ul class="summary-list"><li>The Russell 2000 could rally 40% amid a shift in Fed policy, Fundstrat's Tom Lee told CNBC.</li><li>The rotation out of large-caps will become evident in August, weighing on the S&amp;P 500, he said.</li></ul>A rally may be brewing in overlooked parts of the stock market.On Monday, the small-cap <a target="_blank" href="https://markets.businessinsider.com/index/russell_2000">Rusell 2000</a> climbed 1.8%, reaching a high not seen in two and a half years. The index has notched gains amid signs of buckling in large-cap peers and a rotation out of the biggest winners of 2024 as markets position for rate cuts. Last Thursday, the tech-heavy NASDAQ shed 2% as the Russell rose 3.6%."We have small caps even more oversold and valuations — whether you look at medium P/E, which is now at 10 times 2025 earnings — even lower," Fundstrat's Tom Lee told <a target="_blank" href="https://www.youtube.com/watch?v=VyHto5WWQ0k">CNBC</a>. "So we think that this move could be something like 10 weeks and as much as 40%. So I think it is just starting."June's consumer price index report gave the Russell 2000 its green light to rally, he said, given how "astonishingly soft" the data was. That month, <a target="_blank" href="https://www.businessinsider.com/inflation-cpi-june-prices-food-energy-fed-interest-rate-cuts-2024-7#:~:text=The%20consumer%20price%20index%20increased,%25%20month%2Dover%2Dmonth.">inflation cooled off more than expected</a>, bolstering expectations that the Federal Reserve would cut interest rates come September.Compared to names backing the S&amp;P 500, stocks in the Russell 2000 tend to be more rate-sensitive. That makes <a target="_blank" href="https://markets.businessinsider.com/news/stocks/stock-market-outlook-sp500-vs-russell2000-small-caps-outperform-economy-2023-6">higher interest rates a challenge for the index</a>, but it rally when borrowing costs finally edge down."I think that August is really going to be one where the rotation becomes more evident, and I think it's going to be stronger small-caps and maybe flat, just slightly down for the S&amp;P," Lee said.In fact, when the Russell 2000 last rallied around 30% in the final months of last year, large-caps had similarly sputtered, Lee said. Given how oversold small-caps are today, the rotation could be even more sizable this time around, he added.Currently, concern is looming over the makeup of major indexes, as just a handful of tech mega-caps are responsible for the majority of gains seen this year. The narrow market concentration looks similar to the <a target="_blank" href="https://markets.businessinsider.com/news/stocks/stock-market-extreme-concentration-sp500-record-2022-bear-market-schwab-2024-6">previous bear market</a>, Charles Schwab said recently.But others are also noticing that small-caps are looking more attractive."This switch doesn't appear to be a 'one off' although it's far too early to suggest that we're experiencing a sustainable trend," Trade Nation's senior market analyst David Morrison wrote."Nevertheless, there's certainly a bullish interpretation to the rotation, as any profit-taking in 'overvalued' tech gets funneled into more neglected areas of the US stock market," he added.

Small-caps are breaking out and will rally 40% as the S&P 500 sputters, Fundstrat's Tom Lee says

<ul class="summary-list"><li>Small-caps historically decline before and after the first interest rate cut, Barclays reported.</li><li>This argues against the growing narrative that the easing cycle will boost small-caps, the bank said.</li></ul>Small-caps are getting new love on Wall Street, but not much supports the expectation for the sector to surge, Barclays wrote.In fact, strategists led by Venu Krishna found that the small-cap-tracking <a target="_blank" href="https://markets.businessinsider.com/index/russell_2000">Russell 2000</a> typically declined once rate cuts started."We think this argues against the popular narrative that the start of a rate cutting cycle signals a sustainable uptrend for small caps vs. large caps," the note said.The authors compared the Russell's performance to the <a target="_blank" href="https://markets.businessinsider.com/index/s&amp;p_500?utm_source=markets&amp;utm_medium=ingest%3Futm_source%3Dmarkets&amp;utm_medium=ingest&amp;utm_medium=ingest&amp;utm_source=markets&amp;utm_medium=ingest&amp;utm_source=markets">S&amp;P 500</a> through 13 easing cycles from 1980 to 2020. Although the note acknowledged a range of outcomes, a broad downtrend was evident in the 150 days before and after the first cut.<div type="image" title="Chart comparing RTY and SPX performance" height="1338" width="2832" msid="111869324" hostid="261" sizebytes="67842"></div>Their finding opposes many prevailing viewpoints on Wall Street, where rising bets of lower interest rates have sent investors piling into the small-cap trade. Last Thursday, the Russell rose 3.6%, even as the tech-heavy NASDAQ shed 2%.Many expect these stocks to benefit from lower borrowing costs, given their high debt exposure. The rotation into small-caps was first sparked by June's surprisingly cool inflation report, which bolstered confidence that the Federal Reserve would slash rates as soon as September.The Russell <a target="_blank" href="https://markets.businessinsider.com/news/stocks/small-caps-russell-2000-rally-outlook-sp500-selloff-fundstrat-tech-2024-7">faces 40% upside</a> by August, given how oversold its assets have been, Fundstat's Tom Lee predicted this week.But Barclays outlined why this might not be the case historically. In part, falling interest rates might help ease debt burdens, but they can also signal a cooling economy — which favors large-cap exposure."Small caps also continue to face numerous other headwinds, including forward EPS revisions that lag those of their large-cap peers, higher volatility (which is out of favor when the yield curve is exiting inversion and in election years), and heightened vulnerability to trade tensions despite a more domestic sales focus," Barclays wrote.Skeptics agree. Market veteran Ed Yardeni wrote this week that the small-caps trade has no legs, given the sector's lackluster forward earnings, revenue, and profit margins.Meanwhile, others acknowledged the rally but <a target="_blank" href="https://markets.businessinsider.com/news/stocks/small-cap-rally-rotation-stock-market-short-lived-large-caps-2024-7">questioned its staying power</a>."As the Fed embarks on a rate cutting cycle, markets tend to cheer it initially and even for a short period after the cuts begin. But if that cutting cycle occurs in concert with slowing economic data, disappointing earnings, or a quick compression in multiples, small-caps would likely lose steam quickly," SoFi's head of investment strategy Liz Young Thomas said in written commentary.She added: "Not to mention, the Fed typically cuts rates late in the economic cycle, not early in the cycle when small-caps tend to have their moment in the spotlight."

Don't bet on the stock-market rotation as small-caps historically suffer when rates come down, Barclays says

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.

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

ANI

Why the stock market's rotation into small-caps will be short-lived

Matthew Fox

Small-caps are breaking out and will rally 40% as the S&P 500 sputters, Fundstrat's Tom Lee says

Filip De Mott

Don't bet on the stock-market rotation as small-caps historically suffer when rates come down, Barclays says

Filip De Mott

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

PTI

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