Investors are flocking to mid- and small-cap mutual fund schemes. In the first four months of this financial year, these two categories accounted for more than 50% of the total folios added by the mutual fund industry — the highest since the Association of Mutual Funds in India (Amfi) began making the data public. The rise of the mid- and small-cap funds is staggering, given that their share in folio additions was just 2.91% in FY21. In fact, small-cap schemes had seen a net decline in folio additions then. The two categories have also attracted healthy net inflows in recent months, accounting for about 56% of total equity fund inflows in July 2026. This was the first time since 2023 that cumulative monthly inflows into mid- and small-cap funds accounted for more than half of total equity inflows.