Mid and small-cap funds beat benchmark

Our Bureau Mumbai | Updated on June 02, 2011


Right mix of stock selection helps beat index: Managers

Equity mid- and small-cap mutual funds have been beating their indices hollow even in a bear market.

According to data on, around 84 per cent of the mid-and small-cap funds have given positive returns in the last one-year period. For these schemes, the benchmark is the CNX Mid-cap index, which gave out a return of 0.2 per cent, while the average returns posted by these funds for the same period has been higher at 7.64 per cent.

May outperform

Fund managers are attributing this to a right mix of stock selection. “These funds have been performing well. Although in the last six months, they have been under-performing vis-à-vis the large-cap funds, we expect these funds to marginally outperform in the next one year,” said Mr Ramanathan.K., Chief Investment Officer, ING Investment Management (India) Pvt. Ltd.

Forty eight out of 57 funds in this category have give returns in the 0.35-19.5 percent range. The best performing fund in this category is the HDFC Mid-Cap Opportunities fund which has given 19.5 annualised returns. This fund has invested mostly in engineering (18.9 per cent of the AUM), healthcare (15.5 per cent) and financial (12.5 per cent) sectors. The most preferred sectors for most of the mid-and small-cap funds have been the financial, FMCG and services.

Stock selection

When markets decline, the highest decline is generally seen in case of the mid- and small-cap stocks. The BSE Mid-cap index has fallen by -3.39 per cent and the BSE Small-cap index fell by -10.17 per cent.

However, the CNX Mid-cap went up, albeit marginally. The difference in the returns is because of the stock selection in the indices.

The bottom five performing funds in this category have been the L&T Small Cap, JM Core 11, HSBC Midcap equity, HSBC Small Cap and JM Emerging Leaders.

Taurus Discover Fund which was one of the best performing funds giving about nine per cent annualised returns. But in the last one year, the scheme has returned -1.17 per cent returns.

Published on June 02, 2011

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