This fund is not suitable for the investor's core portfolio but as an addition, to act as a diversifier.
Investors can consider limited exposure to units of Religare Mid N Small Cap fund. The fund delivered a good 17 per cent annually over the last three years, keeping pace with top peers such as HDFC Mid-Cap Opportunities.
This return is also 11 percentage points higher than the benchmark CNX Midcap’s performance. The fund has a good blend of mid- and small-cap stocks with a growth bias.
Religare Mid N Small Cap is suitable only for investors with a penchant for risk and for those who have a long-term perspective of at least five years.
Given its limited track record and tendency to fall sharply in falling markets, the fund need not, at present, form the core of an investor’s portfolio. It can be an addition to act as a diversifier.
The Religare house has another mid-cap focussed fund — Religare Mid Cap. This has a more value focus and has delivered slightly lower returns than the Mid N Small Cap fund.
If you have a higher risk appetite, then Religare Mid N Small Cap may suit your needs.
Investors can take the systematic investment plan route to invest in the fund to combat volatility. For instance, your fund value would have declined by 5 per cent had you invested as lumpsum a year ago.
But a SIP run over this period would have returned 5 per cent, bucking the falling market trend.
Portfolio & performance
Like most equity funds, Religare Mid N Small Cap too shed its NAV in the last one year, falling close to 5 per cent.
The benchmark index fell 11 per cent over this period. Still, quite a few mid-cap funds, including IDFC Premier Equity and HDFC Mid-Cap Opportunities, managed a better show containing declines to less than 2 per cent.
They managed to do so either because they had a higher proportion of cash/debt or held some of the more defensive large-cap stocks such as TCS or GlaxoSmithKline Consumer Healthcare.
Religare Mid N Small Cap did have a few large-cap high beta stocks that fell with the market. The fund’s mid- and small-cap picks, though, did a good job.
Stocks such as Kaveri Seed Company, Tree House Education & Accessories and VA Tech Wabag were some of the picks that returned well over the last one year. The fund’s small asset size allows it make adept calls in the small-cap space.
Religare Mid N Small Cap fund has also been highly consistent in beating its benchmark. On a one-year rolling return basis, the fund beat its benchmark 77 per cent of the times since its inception.
Religare Mid N Small Cap has also delivered better than its sister fund Religare Midcap on a risk-adjusted basis (measured by sharpe ratio) over the last three years.
That means the former has delivered more returns for the amount of risk it took on .
Banking and consumer non-durables are the top sectors that Religare Mid N Small Cap held as of June. Offbeat sectors such as media and entertainment also appear in the top five sectors list.
The fund is managed by Vinay Paharia. The NAV per unit of the growth option is Rs 14.5.