How Much Have Mutual Fund Houses Invested in IPOs to Support Small-Cap Growth Stories?

New Delhi, Aug 5 (NationPress) The mutual fund sector in India has demonstrated strong engagement in newly launched companies, with total allocations exceeding Rs 5,294 crore during the recent initial public offerings (IPOs) for the April to June quarter, as outlined in a report released on Tuesday.

The majority of these entrants are classified as small-cap, with only one being categorized as a midcap, according to stock broking platform Ventura's findings.

As per the report, mutual fund houses have invested Rs 1,351 crore in Ather Energy, Rs 679 crore in Schloss Bangalore, Rs 495 crore in Aegis Vopak Terminals, Rs 398 crore in Belris Industries, Rs 387 crore in Oswal Pumps, Rs 357 crore in Ellenbarrie Industrial Gases, Rs 241 crore in Kalpatru, and Rs 55 crore in Sambhv Steel Tubes within this quarter.

Additionally, Rs 1,331 crore was allocated for the IPO of HDB Financial Services, which is classified as a midcap company.

Meanwhile, among the top 335 equity schemes from the leading 20 Asset Management Companies (AMCs) (ranked by assets under management) in the January to March quarter, 90% of these schemes surpassed the Nifty 50 TRI, highlighting the index's relatively poor performance during this period.

However, only 41% of the schemes outperformed their respective category benchmarks, indicating heightened competition and more selective alpha generation, as reported.

The report reveals that Invesco MF achieved the highest benchmark outperformance, with 13 out of 16 schemes (or 81%) exceeding expectations, marking the highest success rate among competitors.

Furthermore, Mirae, Kotak, Nippon, Edelweiss, Canara Robeco, and Aditya Birla SL MF had all their equity schemes outperform the Nifty, showcasing a consistent performance across their portfolios.

According to the findings, larger fund houses like ICICI Prudential MF and Aditya Birla SL MF reported the most significant absolute number of outperforming schemes relative to the Nifty, although benchmark outperformance was more widely spread among mid-sized players.

Small-cap funds saw a 20% increase in assets under management (AUM), the highest growth among all categories, as noted in the report.

This remarkable surge signifies a notable turnaround, as small-cap funds have ascended from the bottom of the rankings in the previous quarter to emerge as leaders, reflecting renewed investor confidence in high-growth, high-risk segments.

According to the report, mid-cap (17%) and multi-cap (16.5%) funds also exhibited significant growth, underscoring a broader market rally and increased interest in diversified investments beyond large-cap names.

The uptick in AUM across these categories suggests that investors are willing to shift down the market-cap spectrum in pursuit of enhanced returns, driven by favorable valuations, improved earnings visibility, and substantial inflows from domestic retail investors, the report concluded.