MUMBAI, March 30 -- Small- and mid-caps are drawing investors back after a bruising start to 2026, even as blue chips remain under pressure. After January's record Rs.5,191.06 crore redemption, small-cap funds saw inflows of Rs.3,881.06 crore in February, prompting fund houses to launch new schemes and reopen existing ones.

The opportunity is real, but so are the risks. Experts warn that low liquidity, stretched valuations, and governance weaknesses can turn potential gains into sharp losses.

"The runway is huge and positive, but the interim perils are also real," remarked Harsh Gupta Madhusudan, fund manager-PIPE, Ionic Asset.

Following this renewed interest, ICICI Prudential Mutual Fund reopened subscriptions to its Small Cap Fund in...