In the last one year,
the fund has outperformed its benchmark handsomely generating an alpha of 13%.
Swapnil Suvarna feels the fund is suitable for aggressive investors looking to
capture mid- and small-cap rally over the long term.
Launched
on March 2008, Religare Mid N Small Cap Fund earlier known as Lotus India Mid n
Small Cap Fund is managed by Vinay Paharia. He has been managing this fund
since May 2008, soon after the inception of the fund. Under ideal conditions,
the fund seeks to invest over 65 percent of its assets in mid caps and 15 – 30
percent of its assets in small cap space. The mid- and small cap space consist
of those companies whose market capitalization is less than the highest
constituent stock and greater than the last stock of CNX MidCap and BSE
SmallCap index respectively. The fund is benchmarked against CNX MidCap.
Performance Analysis
The
major highlight of this fund is that though it was launched at the start of the
bear phase in 2008, the fund management responded to the market volatility with
vigor. Since inception, the fund has delivered CAGR of 13 per cent against the
benchmark CAGR of 10 per cent. The fund has also exhibited excellent downside
protection skill in its short period of existence.
In the past one year, when the markets were under pressure, the mid- and small-cap space was the most beaten down. In this challenging phase, the fund has been an excellent performer as it has registered a gain of 10 percent against its benchmark which has declined 3 percent.
|
Period |
NAV (Rs) |
CNX Midcap |
Nifty |
|
|
Since Inception |
13.10% |
9.94% |
6.55% |
|
|
3-years |
23.72% |
16.31% |
10.78% |
|
|
1-year |
10.23% |
-3.31% |
3.71% |
|
|
6-months |
6.27% |
-1.14% |
-2.53% |
|
|
3-months |
5.97% |
-2.37% |
-4.86% |
|
|
Returns as on July 20, 2011.
Returns less than 1 year are absolute, while greater than 1 year is
annualised. |
||||
|
Source: Accord Fintech |
||||
Portfolio Analysis
The
fund invests in mid- and small-cap space selected through bottom-up approach
along with top-down approach for industry, economic and technical analysis. The
stock selection done through bottom-up approach is categorized under seven
frameworks i.e. Star which taps young high growth companies, Diamond which taps
undervalued companies, Leaders/Warriors which tap established companies that
are better than industry and Frog Prince/Shot Gun/Commodities which tap
opportunistic investments.
The
fund maintains over 40 percent of its core portfolio in Leaders/Warriors, over
20 percent in Stars and around 10 percent of its portfolio in undervalued and
opportunistic companies. This methodical diversification of the fund portfolio
has made it minimize risk which is reflected in its performance. During the
volatile periods, the fund management has been nimble in identifying investment
ideas.
The
fund has major portion of its assets invested in scrips from sectors like
consumer food, pharmaceuticals & drugs, hospitals & healthcare
services, industrial gases & fuels, household & personal products and
banks. Of late, the fund has reduced its exposure in sectors like NBFC,
IT-software, textile and leather. During unstable periods, the fund had
significant cash holding.
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The fund’s performance demonstrates both the management’s stock picking ability and nimble maneuvering in difficult periods. We suggest your aggressive investors to consider investing some portion of their monthly investment in this fund to capture the rally in mid- and small-cap space over the long term. Although there is good potential of generating wealth, remember there is higher risk in mid and small cap space.
