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LIC Mutual Fund is doubling down on small cap investments as part of its strategy to reintroduce five flagship equity schemes, despite recent market volatility that saw the Nifty SmallCap 100 index drop approximately 10.5 per cent from its peak.

During a media briefing on Wednesday, the fund house announced the relaunch of schemes, including LIC MF Small Cap Fund, LIC MF Value Fund, LIC MF Multi-Asset Allocation Fund, LIC MF Dividend Yield Fund, and LIC MF Focused Fund. Four of these funds were acquired from IDBI Mutual Fund in July 2023.

Not enough marketing of these schemes has been done so far, said MD & CEO of LIC MF Ravi Kumar Jha, explaining the rationale for the relaunch of the schemes.

The small cap fund, which had an AUM of just ₹162 crore when acquired from IDBI Mutual Fund, has now grown to ₹539 crore. According to LIC MF fund managers, despite recent corrections, small caps remain an “evergreen” investment option.

“Companies that are part of large caps today, were in a small cap space say around a decade or one-and-a-half decades back. Today, we believe some of the future large-cap and mid-cap players are sitting in our small cap markets,” said Nikhil Rungta, Co-CIO of LIC Mutual Fund, emphasising a long-term perspective.

LIC MF’s Chief Investment Officer Yogesh Patil highlighted the potential of these re-introduced funds: “We are re-introducing these five flagship equity schemes, which have the potential to generate significant wealth for investors with diverse financial needs over the long term.”

When questioned about their approach to balancing growth and stability across market caps, particularly in the dividend yield fund, the managers revealed a diversified strategy: “It is a kind of balanced portfolio … 47 per cent is large caps, close to 38 per cent is small caps, and 15 per cent is mid-caps.”

The fund house emphasised that small caps offer a much larger investment universe compared to large- and mid-caps. “Large cap has only 100 stocks, mid cap has only 151 stocks, but the universe of a small cap is 2P, it is from 251 to almost 5000 stocks. So, there are a lot of possibilities for investors to generate wealth,” noted Rungta.

LIC Mutual Fund’s total AUM has grown significantly from ₹18,382 crore in June 2023 (before the IDBI MF acquisition) to nearly ₹40,000 crore currently. The AUM rose from ₹33,854 crore in March 2025 to ₹37,554 crore in April 2025, registering an 11 per cent growth.

The fund house aims to increase its AUM to ₹1 lakh crore by the end of the current financial year. The collective AUM of the five flagship funds currently stands at ₹1,915 crore, which the fund managers believe has the potential to grow into “mid 4-digit” figures in this financial year.

Despite recent market corrections, with the Nifty SmallCap 100 currently at 17,148.80 (up 1.45 per cent on the day), but still below its 52-week high of 19,716.20, LIC MF remains bullish on small caps, though managers advise investors to maintain a long-term horizon of more than five years for such investments.

Published on May 14, 2025