The strong performance of schemes investing in mid- and small-cap shares between January and October has encouraged more mutual funds to seek regulatory approval to launch such products.
Fund houses anticipate that the superior returns from mid- and small-cap schemes compared to large-cap ones in the recent past may attract more money into such products, especially after the 20-25 % correction in these stocks.
Religare Mutual Fund , IDFC Mutual Fund and Axis Mutual Fund have filed offer documents with the Securities and Exchange Board of India (Sebi) to launch ‘mid- & small-cap fund’ , ‘small-cap equity fund’ and ‘ mid-cap fund’ , respectively. Motilal Oswal Asset Management has approached Sebi to launch a midcap ETF.
According to sources in distributor circles, Pramerica Mutual Fund and Peerless MF are also planning to apply for ‘low-cap’ funds over the next few weeks.
“Investment in mid-cap shares yields higher returns over a longer timeframe. If you take a 10-year period, mid-cap indices outperform key benchmarks by about 4-6 %,” said Nitin Rakesh, CEO & managing director, Motilal Oswal Asset Management Company .
Mid- and small-cap funds have returned 20% over the past one year. The BSE mid-cap and small-cap indices have returned about 15% in the period. Large-cap funds have fetched 16% returns in the period. But for the correction in November, returns from these schemes would have been higher as they fetched 75-100 % between January and October .
Fund managers consider the recent decline in mid- and small-cap stocks in the past two months as an opportunity to buy them cheaper .
“When compared to large-cap peers, there are several mid- and small-cap stocks that have relatively more upside to grow in value,” said the chief investment officer of a private mutual fund, adding, “In terms of earnings growth, several mid- and small-cap companies have beaten their larger peers.”
Fund managers rely on mid- and small-cap stocks to help their diversified equity schemes perform better than peers and the benchmark indices. This is because small- and mid-cap stocks are not as widely tracked as their largecap peers, enabling fund managers to buy them cheap. On the flip side, small and midcap stocks fall deeper and faster when broader markets are in a downtrend.
“Small and mid-cap stocks have fallen sharply over the past two months; this, in a way, could mean that small and mid-cap stocks could rally when broader markets break out the current range,” said Bharat Shah, head of institutional sales, Ventura Securities. “Now is the time for investors to buy mid and small-cap stocks. Investors in mid- & small-cap mutual funds will also benefit from a probable rise in overall markets,” Mr Shah added.
Source: http://economictimes.indiatimes.com/personal-finance/mutual-funds/mf-news/funds-bet-big-on-small-and-mid-cap-schemes/articleshow/7160460.cms
Fund houses anticipate that the superior returns from mid- and small-cap schemes compared to large-cap ones in the recent past may attract more money into such products, especially after the 20-25 % correction in these stocks.
Religare Mutual Fund , IDFC Mutual Fund and Axis Mutual Fund have filed offer documents with the Securities and Exchange Board of India (Sebi) to launch ‘mid- & small-cap fund’ , ‘small-cap equity fund’ and ‘ mid-cap fund’ , respectively. Motilal Oswal Asset Management has approached Sebi to launch a midcap ETF.
According to sources in distributor circles, Pramerica Mutual Fund and Peerless MF are also planning to apply for ‘low-cap’ funds over the next few weeks.
“Investment in mid-cap shares yields higher returns over a longer timeframe. If you take a 10-year period, mid-cap indices outperform key benchmarks by about 4-6 %,” said Nitin Rakesh, CEO & managing director, Motilal Oswal Asset Management Company .
Mid- and small-cap funds have returned 20% over the past one year. The BSE mid-cap and small-cap indices have returned about 15% in the period. Large-cap funds have fetched 16% returns in the period. But for the correction in November, returns from these schemes would have been higher as they fetched 75-100 % between January and October .
Fund managers consider the recent decline in mid- and small-cap stocks in the past two months as an opportunity to buy them cheaper .
“When compared to large-cap peers, there are several mid- and small-cap stocks that have relatively more upside to grow in value,” said the chief investment officer of a private mutual fund, adding, “In terms of earnings growth, several mid- and small-cap companies have beaten their larger peers.”
Fund managers rely on mid- and small-cap stocks to help their diversified equity schemes perform better than peers and the benchmark indices. This is because small- and mid-cap stocks are not as widely tracked as their largecap peers, enabling fund managers to buy them cheap. On the flip side, small and midcap stocks fall deeper and faster when broader markets are in a downtrend.
“Small and mid-cap stocks have fallen sharply over the past two months; this, in a way, could mean that small and mid-cap stocks could rally when broader markets break out the current range,” said Bharat Shah, head of institutional sales, Ventura Securities. “Now is the time for investors to buy mid and small-cap stocks. Investors in mid- & small-cap mutual funds will also benefit from a probable rise in overall markets,” Mr Shah added.
Source: http://economictimes.indiatimes.com/personal-finance/mutual-funds/mf-news/funds-bet-big-on-small-and-mid-cap-schemes/articleshow/7160460.cms
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