The Hindu Business Line : Mid-cap funds: Performance chart shows wide variance

Kolkata March 28 Several small- and mid-cap funds have struck a discordant note during 2006-07, their performance leaving a trail of doubt regarding the value they are striving to add to investors' portfolios.

As data traced between May 1 last year (when the market had moved up handsomely and funds' assets under management were high) and March 24, 2007, show, the disconnect between good performers and the bad ones in the mid-cap funds category has become far too obvious.

The numbers generated during the fiscal seem to work against the idea that these funds have over longer periods generally delivered quality returns, often beating their benchmark index by convincing margins, say investment circles. A section of retail investors, who had piled on to mid-caps, are caught in the middle of it all, they add.

Barring a few, the scores for most of these funds — considering a list made up of about 35 funds — are in the negative zone, according to a review by DBS Cholamandalam Distribution Ltd (DCDL). The CNX Midcap index has turned in minus 6.47 per cent during this period.

At the lowest end of the ladder are JM Emerging Leaders (minus 26.42 per cent), UTI Thematic Mid cap (minus 24.92 per cent), Canemerging Equities (minus 15.23 per cent), UTI Opportunities (minus 14.35 per cent) and Prudential ICICI Discovery (minus 14.02 per cent).

At the other end of the spectrum — the rare few that have positive scores to their credit — are DBS Chola Opportunities (13.77 per cent), SBI Magnum Global '94 (5.34 per cent) and SBI Magnum Multiplier Plus '93 (3.45 per cent). In all cases, the growth options have been considered.

The difference between a good and a bad performing mid-cap fund is sizeable, feels DCDL. "The mid-cap space and mid-cap funds have historically been among the best performing category, with these funds providing handsome returns, well above what is delivered by the benchmark. But last year was different," the review added.

Serious depletions

Serious investors may track corpus changes as well, DCDL has pointed out. Considering the AUMs pertaining to April 30, 2006 and February 28, 2007, a good number of funds have seen serious depletions. For a few, the reduction is actually in excess of 50 per cent. These include Principal Junior Cap (from Rs 152 crore to Rs 71 crore), ABN Amro Future Leaders (from Rs 620 crore to Rs 279 crore) and ING Vysya Midcap (Rs 69 crore to Rs 34 crore).

In a few odd cases, however, assets have surged. Such funds include Sundaram BNP Paribas Select Midcap (up 163 per cent, from Rs 745 crore to Rs 1,962 crore), SBI Magnum Global '94 (up 77 per cent, from Rs 692 crore to Rs 1,230 crore) and Prudential ICICI Emerging STAR (up 41 per cent, from Rs 785 crore to Rs 1,110 crore).

Not all these funds have extraordinarily high exposure to mid-cap stocks, DCDL maintains. Among those that have well over 50 per cent in BSE Midcap constituents are Birla Midcap (66 per cent), Franklin India Smaller Companies (55 per cent), HSBC Midcap (53 per cent) and Kotak Midcap (57 per cent).

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