NEW DELHI: Mutual funds focused on small-caps have emerged as the winner with a net inflow of close to Rs 11,000 crore in April-June quarter, as fund managers struggle to create alpha in the large-cap space, and the trend is expected to continue for some time.

On the other hand, large-cap space, which is yet to pick up momentum, witnessed an outflow of Rs 3,360 crore during the quarter under review, data from the Association of Mutual Funds in India (Amfi) showed.

Apart from the June quarter, small-cap funds logged an inflow of Rs 6,932 crore in three months that ended in March.

“The strong rally witnessed in the mid and small-cap indices in the last few months, and the fact that it is becoming difficult to create alpha in the large-cap space can be the reasons for the huge inflows into smallcap funds,” Himanshu Kohli, co-founder, Client Associates, said. “The performance of small-cap stocks has been exceptional in recent months. An explanation for this may lie primarily in the valuation gap between small-cap firms and large-cap companies. This always happens when markets become expensive but fund flow chases stocks,” said Mukesh Kochar, national head-Wealth at AUM Capital Market.