Over a one-year period, small and mid-cap funds have delivered 79% absolute returns while large cap and diversified funds have delivered 46% and 59% returns, respectively.
Small & midcap funds were the best performing category, with the CRISIL– AMFI Small & Midcap Fund Performance Index delivering the highest returns in all timeframes ended September 30, 2014, said a CRISIL report.
Small and mid-cap category delivered absolute returns of 8% for the September quarter, compared with the CRISIL-AMFI Equity Fund Performance Index’s 4 % and the CNX Nifty’s 5%. Year till date (nine months ended September), too, the category gave an impressive 50% return as the CNX Midcap Index and the CNX Small Cap Index delivered 41% and 45%, respectively, compared with the CNX Nifty’s 26% return.
However, there is a concern whether small and mid-cap funds will be able to sustain this performance in future. Thus, some fund houses have stopped accepting large ticket investments in their small and mid-cap funds.
High exposure to small cap stocks
Across equity categories, funds having higher exposure to small and mid-cap stocks have fared better than their peers. For instance, CRISIL Fund Rank 1s (top 10 percentile of all ranked schemes) of small & midcap category had 89% exposure to small and mid-cap stocks compared with 79% of CRISIL Fund Rank 5 peers (Bottom 10% of all ranked schemes).
Even in the diversified and large cap categories, the exposure to small & midcap stocks in CRISIL Fund Rank 1 funds of large cap and diversified category has increased gradually from 15% to 22% and 36% to 40% respectively during the period between January 2014 and September 2014.
At the fund house level, UTI Mutual Fund led the tally of top-ranked funds for the September quarter with ten funds in CRISIL Fund Rank 1, followed by Birla Sun Life Mutual Fund, ICICI Prudential Mutual Fund and Reliance Mutual Fund with five funds each, added the report.
Methodology
CRISIL Mutual Fund Ranking covers close to 90% of the average assets under management of open ended schemes at the end of September 2014. It uses a combination of NAV and portfolio-based attributes for evaluation. It takes into consideration key parameters like risk-adjusted returns, asset concentration, liquidity, asset quality and asset size. The rankings also include categories that focus specifically on long-term consistency in performance. The ranks are assigned on a scale of 1 to 5, with CRISIL Fund Rank 1 indicating ‘very good performance’. In any peer group, the top 10 percentile of funds are ranked as CRISIL Fund Rank 1 and the next 20 percentile as CRISIL Fund Rank 2.