Retail fund flows surge: Mid, smallcap schemes draw Rs 20,255cr in Q1; investors chase high returns despite expensive valuations

Retail investors are aggressively investing in mid and smallcap mutual funds, drawn by their high returns, allocating ₹20,255 crore in Q1 FY26. Experts caution about stretched valuations, with mid and smallcap indices trading at premiums compared to historical averages and large caps. Financial advisors recommend a cautious approach, suggesting limited allocation and a long-term investment horizon.