Mutual Funds

Religare Mid N Smallcap Fund: INVEST

Bhavana Acharya | Updated on November 09, 2013


While the Sensex may be blithely skipping along to new highs, the market hasn’t been as kind to stocks with smaller capitalisations.

The CNX Midcap index has lost 13 per cent year to date, even as the Nifty rose 5 per cent.

Valuations of the mid-cap index too, corrected from 18 times at the start of the year to 13 times now, making mid-cap stocks with sound underlying fundamentals attractive.

Religare Mid N Smallcap fund, which has consistently beaten the CNX Midcap index since its launch in March 2008, is a good bet here. Returns are in line with peers, including IDFC Premier Equity and HDFC Mid-cap Opportunities. The fund can serve as a portfolio diversifier to add bite to returns.

Investors can allocate small amounts of their portfolio to this fund. But since mid-cap stocks are inherently volatile, the fund suits those who can stomach this risk. Systematic investments can be considered to ride out volatility.

Steady performance

Over one-, three-, and five-year periods, the fund’s returns are better than the benchmark CNX Midcap’s by a margin of nine to eleven percentage points. It ranks in the top quartile of mid-cap oriented funds across time frames.

It also scores on consistency — on an annual rolling return basis since inception the fund has beaten its benchmark more than eight out of 10 times.

For instance, in the 2011 downturn, the CNX Midcap index lost almost twelve percentage points more than the fund. In the 2012 upturn too, saw it squarely beating the CNX Midcap index.


The fund, for the most part, follows a buy-and-hold strategy, picking up stocks with a longer-term view in mind.

Most of the time, banking has been the top portfolio holding, though the concentration has been scaled down from a high of 20 per cent in October last year to 13 per cent now. In this space, picks such as ING Vysya Bank and J&K Bank have performed well.

The other top holding has been the FMCG sector, where the fund’s offbeat picks, such as Britannia Industries, Godrej Consumer Products and Agro Tech Foods, turned out to be solid performers.

Unusual top sector holdings are in pesticides and capital goods. The former has paid off with stocks, such as Bayer CropScience, PI Industries and Rallis India.

The latter, though, is yet to pick up despite having fundamentally sound stocks, such as Greaves Cotton and Kalpataru Power T&D.

Still, its fairly diverse holdings – the top ten stocks account for just about 40 per cent of its September portfolio – limits risks in individual stocks.

Published on November 09, 2013

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