In 2023, as equity markets surge, mid and small cap segments are gaining attention with significant fund flows. This is because, 1. Time correction and earnings catchup: Mid and small caps endured a period of time correction, with improved earnings, resulting in reasonable price to earnings ratios. 2. Higher returns with extra volatility: Historical data shows mid and small cap funds delivering higher returns with slightly more volatility, offering a better risk-return profile. 3. Growth tailwinds: These segments benefit from agility and growth potential, particularly in a growing market with initiatives like "Make in India" and "China Plus One." 4. Undiscovered gems and new themes: Mid and small caps often represent undervalued opportunities with unique themes like AI, IoT, and more, which are less prevalent in large caps. 5. Less institutional coverage: With less institutional attention, mutual funds can make informed decisions based on research, avoiding herd mentality.
In 2023, as equity markets surge, mid and small cap segments are gaining attention with significant fund flows. This is because, 1. Time correction and earnings catchup: Mid and small caps endured a period of time correction, with improved earnings, resulting in reasonable price to earnings ratios. 2. Higher returns with extra volatility: Historical data shows mid and small cap funds delivering higher returns with slightly more volatility, offering a better risk-return profile. 3. Growth tailwinds: These segments benefit from agility and growth potential, particularly in a growing market with initiatives like "Make in India" and "China Plus One." 4. Undiscovered gems and new themes: Mid and small caps often represent undervalued opportunities with unique themes like AI, IoT, and more, which are less prevalent in large caps. 5. Less institutional coverage: With less institutional attention, mutual funds can make informed decisions based on research, avoiding herd mentality.