Mid Cap Funds aims to provide investors with opportunities for long term growth in capital along with the liquidity of an open-ended scheme by investing predominantly in a well diversified basket of equity stocks of Midcap companies.
In the recent bull run, post the election results, Mid Cap Stocks which were beaten badly during recession recovered smartly and outperformed large cap indices across the one year time frame. However, while comparing performance over a period of 3-5 years, it is the large caps that have outperformed.
In a downturn, these schemes are expected to lose faster than the bluechips. This could mainly be on account of the higher beta that the mid and small caps carry, which makes them all them extremely risky and hence unsuitable for risk averse investors. Hereunder is the performance of these schemes over various time horizons.
| Mutual Fund Scheme | Asset | NAV | 1 month | 6 month | 1 yr | 3 yr | 5 yr | | (Rs. cr.) | | DSP-BR Micro Cap Fund | 274 | 12 | -4 | 37 | 161 | -- | -- | Sundaram Select Small Cap | 340 | 11 | -8 | 24 | 147 | 15 | -- | Sundaram Select Midcap | 1945 | 130 | -8 | 22 | 146 | 40 | 248 | L & T Midcap Fund | 23 | 35 | -6 | 24 | 142 | 33 | 140 | DSP-BR Small & Mid Cap | 746 | 14 | -7 | 29 | 137 | 37 | -- | Birla Sun Life Midcap Fund | 1294 | 99 | -8 | 22 | 136 | 52 | 210 | Sundaram S.M.I.L.E Fund | 561 | 29 | -11 | 17 | 136 | 58 | 191 | SBI Magnum Midcap Fund | 340 | 21 | -12 | 16 | 133 | -7 | 112 | Sahara Midcap Fund | 10 | 26 | -7 | 19 | 133 | 43 | 155 | JM Mid Cap Fund | 15 | 24 | -11 | 10 | 131 | 8 | 89 | UTI Mid Cap | 311 | 28 | -6 | 30 | 131 | 24 | 108 | Religare Mid Cap Fund | 34 | 12 | -5 | 26 | 128 | 17 | -- | Religare Mid N SmallCap | 26 | 11 | -3 | 30 | 126 | -- | -- | Franklin (I) Smaller Cos | 598 | 12 | -9 | 21 | 125 | 14 | -- | BSE MidCap | | | -8.7 | 18.4 | 126.6 | 8.1 | | Sensex | | | -7.4 | 9.3 | 79.1 | 12.4 | 147.8 |
Schemes like Sundaram Select Mid Cap Fund which have a high sharpe ratio generate better return when compares to other schemes at the same level of risk. While these schemes are meant for only the high risk investors, investment herein can be undertaken in a staggered fashion and may represent a small part of one’s portfolio.
For now, one would do well to wait for the market to settle down and provide a clearer trend with the Railway and Union Budget round the corner. Mid-cap exposure can be sought once the dust settles post budget and there is a clear direction.
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