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Even as the CNX Midcap Index raced ahead of the Nifty in 2012, funds focussed on mid-cap stocks managed an even better feat.
On a one-year basis, these funds on an average gained 40.2 per cent, compared with a 36 per cent jump in the CNX Midcap Index; the Nifty rose about 23 per cent. More than two-thirds of the 39 schemes fared better than the benchmark. The schemes that led the outperformance include SBI Magnum Emerging Businesses (52.7 per cent), Principal Emerging Bluechip (51.9 per cent), Axis Midcap (50.2 per cent), BNP Paribas Midcap (49.5 per cent) and Taurus Discovery (49.1 per cent).
HDFC Capital Builder (26 per cent), Sundaram Equity Multiplier (29.3 per cent), SBI Magnum Multiplier Plus 93 (29.9 per cent) and Birla Sun Life Small and Midcap (30.2 per cent) were the prominent laggards.
However, the performance gap narrowed down on a three-year basis, as most of the schemes surpassed the benchmark’s returns. These schemes, on an average, gained 9.9 per cent over the last three years, compared with a modest 4.7 per cent rise in CNX Midcap during the same period.
Higher allocation towards sectors such as Industrials caught them on the wrong foot. Choice of stocks also played a key role in underperformance.
For instance, inclusion of stocks such as Allied Digital, Diamond Power Infra, BF Utilities and Venkys dragged the performance of HSBC Midcap.
Choosing right stocks
SBI Magnum Emerging Businesses continued to top the list on a three-year basis too, delivering 23.8 per cent returns. Higher exposure to stocks such as Page Industries, Bajaj Holdings, Spice Jet and Muthoot Finance helped the fund.
Religare Mid and Small Cap (17.2 per cent), IDFC Premier Equity (16 per cent), Canara Robeco Emerging Equities (15.1 per cent) and HDFC Midcap Opportunities (15.1 per cent) also figured among the top gainers.
ICICI Prudential Discovery (10 per cent), IDFC Premier Equity (9.2 per cent), HDFC Mid-Cap Opportunities (8.3 per cent), DSP Blackrock Small and Mid Cap (5.6 per cent) and SBI Magnum Emerging Businesses (4.6 per cent) were the best performers over a five-year timeframe.
Exposure to defensive sectors and stocks helped most schemes beat their benchmarks. For instance, higher exposure towards mid-cap IT stocks such as Mindtree and E Clerx, and pharma players such as IPCA Labs, Glenmark Pharma and Cadila Healthcare helped ICICI Prudential Discovery Fund rake in the highest return on a five-year basis.
Taurus Discovery (9.9 per cent decline), HSBC Midcap Equity (7.1 per cent decline), SBI Magnum Midcap (5.3 per cent decline), ICICI Pru MidCap (4.4 per cent decline) and BNP Paribas Mid Cap (3.7 per cent decline) were at the bottom of the pile.
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