In the last one year, on an average, mid and small cap funds have given returns of 80%, while several schemes have even surpassed 100% returns. Despite volatile equity markets, fund managers are confident that there is steam left in these categories as many stocks are available at attractive valuations.
In the last one year, Sundaram S.M.I.L.E Fund has been the top performer with returns of 123.76%, while DSP BlackRock Micro Cap Fund and Canara Robeco Emerging Equities Fund have given returns of 109.50% and 101.63% respectively.
On expectations of further gains in the mid and small cap category, over half a dozen funds have filed and offer documents with market regulator, Securities and Exchange Board of India (Sebi) to launch their new fund offerings.
Sunil Subramaniam, deputy CEO, Sundaram Mutual said, “We believe there are opportunities in the mid and small cap segment and as earnings improve in the next two-three quarters, this category will continue to deliver positive results.” Sundaram Mutual has also filed an offer document to come out with the Sundaram Select Micro Cap Series XI-XII which will is a 10 year close ended, equity linked saving scheme (ELSS). He added, “Cyclical stocks will continue to perform well and we find enough opportunities for the next 12-18 months.”
In the last one year, S&P BSE Small Cap Index and S&P BSE Mid Cap Index have given returns of over 65% and over 60% respectively.
Constant rise in equity markets since December last year and betting on stocks that could benefit from revival of the Indian economy helped fund managers generate strong returns.
However, several fund managers are of view that, though medium to long term outlook looks positive, markets are headed for much needed correction. “Mid and small cap funds will give positive returns, but investors should not expect similar returns that were seen in 2014. Investors should not come looking at one year returns of funds and should diversify the portfolio at this juncture,” concluded a fund manager from a top fund house.