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Mid-caps flex muscle
The long-term performance of mid- and small-cap mutual fund schemes has been better than their large-cap counterparts, according to a recent analysis by CRISIL.
The CRISIL-AMFI Small and Midcap Fund Performance Index, which tracks 27 mutual fund schemes, has been the best performer over a two-, three- and five-year time frame. In the last five years, this index delivered annual gains of 23.7 per cent, higher than the 16.7 per cent rise in CNX Midcap Index.
Increasing exposure to pharma and auto and paring down holding in banks, oil and gas, and power helped these schemes outperform over a three-year period.
Though large-cap schemes represented by CRISIL-AMFI large-cap fund performance index managed to outdo Nifty, their five-year returns lagged behind other categories such as balanced fund, ELSS (tax saver funds) and diversified equity.
Small is beautiful
Motilal Oswal Asset Management has launched MOSt Focused Midcap 30 Fund. The fund will allocate at least 65 per cent of its assets to stocks that rank between 101 and 200 by market-cap within the listed universe. The balance 35 per cent will be invested in stocks that rank lower than 200 by market cap. The fund will not hold more than 30 mid-cap stocks in its portfolio, suggesting highly concentrated bets. The fund is thus only for those who can stomach high risk. A single stock’s movements can dictate overall returns.
Mid-cap stocks are prone to sharp movements in either direction, especially in current volatile markets. So while a surge in a stock can send returns soaring, so too can a steep slide dent returns.
Stock picks and their timely churn are, therefore, key. The CNX Midcap index is the fund’s benchmark.
The equity portion will be managed by Taher Badshah, who also manages MOSt Focused 25. Abhiroop Mukherjee will manage the debt portion. The fund hopes to collect ₹10 crore from the issue, making it possibly the smallest NFO. The smaller size can, however, limit the worry of impact costs. The NFO closes by February 17. The fund is open-ended.
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