The fund has been consistently beating its benchmark. While the fund has underperformed some of its peers, its one-year returns exceed that of its benchmark CNX Midcap by 13 percentage points. In 2010 and 2012, the fund has beaten its underlying benchmark by 5 and 13 percentage points, respectively.
The fund has performed even in tougher times. For instance, in 2011, when the underlying benchmark index fell more than 30%, the fund restricted its losses to about 21%. We have featured consistently in the top quartile of mid-cap funds through both the bull and bear markets. We believe in protecting investor wealth when the going is not good. Our philosophy is to focus on good businesses and good management, which lead to superior earnings growth, said Anand Shah, CIO, BNP Paribas MF.
The fund's mid-cap allocation hovers anywhere between 40% and 65%. The fund is overweight in mid-caps and under exposed to small-caps relative to its category. This may lead to some missed opportunities on returns as small-caps can soar faster in a bull run, but lead to a better quality portfolio, as mid-caps usually have better fundamentals and protect downside better than tiny-caps, according to Value Research.
The fund's portfolio is skewed towards financials (22.7% of its portfolio) and services (15.9%), while it is underweight on FMCG (2.03%) and neutral on pharma. Despite the steep run-up in the past few months, there is still room for selective outperformance of mid-caps over large caps in the next 12-15 months, said Shah.