Investors with at least two to three years of market experience may enter these funds, but with a longer horizon due to their elevated valuations (relative to large caps).

Midcap fund inflows fell 25 per cent year-on-year in October to ₹3,807 crore, while smallcap fund inflows dropped 20 per cent to ₹3,476 crore. After two strong years in 2023 and 2024, returns have been subdued this year. Experts say long-term investors should remain patient and stay invested through the current phase.

Why have flows slowed?

Net inflows across equity categories declined in October, with open-ended equity inflows falling 19 per cent month-on-month. Largecap funds saw a 58 per cent decline and multicap funds 30 per cent.

"The decline in flows is part of a broader market-wide moderation in inflows