Mutual Funds

Religare Mid N Small Cap Fund: For a slice of mid-cap action

Nalinakanthi V | Updated on January 23, 2018 Published on October 18, 2015

bl18_Religare Midcap

The fund has bettered its benchmark consistently over different time periods



If you are game for high-risk investment and have a long-term horizon, you can invest in mid-cap funds with a good track record.

Religare Invesco Mid N Small Cap Fund is one such. Launched in March 2008, the fund has delivered annual returns in excess of 18 per cent since inception.

The fund has managed to beat its benchmark, the CNX Midcap, by over 10 percentage points over a three, and five-year time frame.

The other interesting facet of this fund has been its ability to contain downsides well during market falls.

For instance, during the November 2010-December 2011 period, the fund’s NAV fell about 26 per cent, lower than the 37 per cent slide in the CNX Midcap Index. Prudent moves by its fund manager Vinay Paharia — who has been managing the fund since May 2008 — to increase cash levels helped the fund stay afloat even during such volatile times.

Similarly, between January and August 2013, even as the CNX Midcap lost about 23 per cent, the fund managed to contain the decline at less than 17 per cent. The fund had parked about 6-9 per cent of its portfolio in liquid assets during this period.

The scheme returns have been higher than the benchmark during the pull-back rallies too.

The fund has not only managed to deliver healthy returns on a point-to-point basis but has also demonstrated the ability to consistently beat its benchmark.

For instance, over the last five years, Religare Invesco Mid N Small Cap Fund’s returns have been better than CNX Midcap almost 99 per cent of the time.

Moves that didn’t work

However, the scheme’s out-performance in the last four months has narrowed; this led the fund to deliver returns barely in line with its benchmark on a one-year basis.

This was largely on account of two things. First, sector shifts over the last four months did not help performance. Increasing exposure to the agri sector by adding stocks in the fertilisers and pesticides space impacted performance.

For instance, the fund bought Coromandel International and Rallis, stock prices of which declined by 21 per cent and 8 per cent respectively, since May. Second, bets in the financials space, such as IDFC, Geojit BNP Paribas and Federal Bank did not work.

Fall in the price of stocks such as Oberoi Realty, Voltas, VIP Industries and Esab India also weighed on performance.

Over the last six months, it has pared exposure to cyclical themes — financials, industrials and cement — and has increased holdings in pesticides, pharma and IT stocks.

Published on October 18, 2015

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