Red Flags or Profit Play? 5 Small-Caps Mutual Funds Just Let Go

While smallcap funds recorded decent returns in May 2025, fund managers also trimmed exposure to certain names—reflecting lack of conviction or profit booking. According to Value Research and Economic Times, these five stocks had the sharpest reduction in mutual fund holdings in the last month:

 

Mahindra Lifespace Developers

Mutual fund holding reduced from 16.8% in April to 11.0% in May (5.8 percentage point decrease). Despite strong residential sales, apprehension of margin pressure and rate of land monetization could have resulted in the withdrawal.

Utkarsh Small Finance Bank

 

Stake declined from 4.3% to 1.0%. While the bank has a decent rural outreach, higher cost of credit and asset quality might have resulted in caution.

 

Heubach Colorants India

Mutual funds decreased holdings from 4.6% to 2.2%. The disappointing earnings growth of the color maker and weakness in global demand likely overshadowed sentiment.

 

Paradeep Phosphates

Stake dropped from 20.7% to 18.5%. Even as a frontrunner private fertiliser player, volatility in raw materials prices and subsidy delays could have led to shaving.

 

CarTrade Tech

Holdings fell to 10.0% from 11.8%. The online auto platform has seen mixed profits and is a tough competitor in the online classifieds space.

 

Though these exits are not necessarily indicative of longterm pessimism, they do reflect the way that mutual funds are proactively reshuffling portfolios as market dynamics change.

 

Source: Value Research, Economic Times, Angel One