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If you would like to buy an aggressive fund that invests in solid mid and small-sized businesses, you should consider IDFC Premier Equity Fund, which has consistently figured in the top ten per cent of the diversified equity rankings for five-, three- and one-year periods.
Offbeat stock choices, a concentrated portfolio and a decision to curtail the fund's size by closing for new purchases when an optimal size is reached, have aided the fund's good performance.
The fund has recently, on March 31, re-opened for fresh investments through the lump sum route and may be kept open until it receives inflows of about Rs 300 crore.
Investments through the SIP mode, though, will stay open. Midcap stocks have trailed large-caps by a big margin and have seen their valuations decline over five years, making this a good opportunity to buy.
IDFC Premier Equity has, in fact, fared well in a not-so-conducive environment for mid-cap investing. The fund's five and three-year compounded annual returns at 20 per cent and 18 per cent respectively are well ahead of the category of mid and small-cap funds, which averaged only a 7 per cent return. One year returns for the IDFC Premier Equity at 15 per cent, also beat the category average of 5 per cent. The fund has also handsomely beaten benchmark BSE-500.
The fund has relied mainly on three key themes to choose its stocks — companies that benefit from the Indian consumption story, those that benefit from agricultural growth and corporates set to capture the next capex cycle, with an accent on the first two. The fund's bottom-up strategy is evident from the fact that its top stock choices last month — Shriram Transport, GSK Consumer, Asian Paints, Coromandel International and Page Industries and yet delivered strong returns.
IDFC Mutual Fund has also tackled the problem of burgeoning assets, the undoing of some successful mid-cap funds, by setting a cap on its size. It opens up its investment window only when it sees a good market opportunity for investing at reasonable valuations.
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