Among the best performing small and mid-cap stock mutual funds, Reliance Small Cap Fund, run by rock-star fund manager Sunil Singhania, rules the roost with a 47.7% annual return.
UTI Mid-Cap fund, run by the soft spoken Anoop Bhaskar, is a close second with a 47% annual return.
Among the others in the 40%+ returns category are Franklin India Smaller Companies Fund (45%), Birla Sun Life Pure Value Fund (44.2%), SBI Magnum Midcap Fund (43.9), HSBC Small Cap Fund (41.6%) and Mirae Asset Emerging Bluechip (41.5%).
| Best Performing Small & Mid-Cap Mutual Fund Schemes As Of April 2014 | ||||
| Mutual Fund Scheme | 1mth | 3mth | 6mth | 1yr |
| Reliance Small Cap – Direct (G) | 11.0 | 12.6 | 44.0 | 47.7 |
| UTI Mid Cap – Direct (G) | 8.2 | 14.9 | 36.7 | 47.0 |
| Franklin (I) Smaller Co -Direct (G) | 8.8 | 16.3 | 31.0 | 44.9 |
| Birla SL Pure Value – Direct (G) | 16.9 | 23.9 | 39.5 | 44.2 |
| SBI Midcap Fund – Direct (G) | 4.3 | 10.8 | 33.5 | 43.9 |
| HSBC Small Cap Fund – Direct (G) | 11.8 | 23.6 | 44.9 | 41.6 |
| Mirae Emerging Bluechip -Direct (G) | 7.5 | 15.8 | 32.9 | 41.5 |
Now, the question is whether the fact that so many funds have together achieved such high returns means that there is a pattern to the manner in which the investments have been made.
Surprisingly, a close study of the portfolios does not reveal any apparent pattern.
The Reliance Small Cap Fund, for instance, appears to have anticipated that there will be a great boom in the information-technology and pharmaceutical sector, and it has positioned itself in the best stocks in these sectors. This fund has 15% of its funds in Tech stocks and 11% in pharma stocks. Among the tech stocks, you will find names like Persistent & Infotech Enterprises, while among the pharma stocks there are names like Unichem Labs, FDC and Biocon having pride of place.
On the other hand, the UTI Mid-Cap fund is overweight the manufacturing (17%) and automotive (15.75%) sectors and is relatively underweight pharma (11.70%) and tech stocks (9.36%). Its top holdings are stocks like Arvind, Kaveri Seed and Eicher Motors.
Similarly, if you study the portfolio of the Birla Sun Life Pure Value Fund, which clocked a 44% return, you will find that it has as much as 32.55% in banking and finance stocks, a sector which hasn’t performed so well. However, the choice of stocks in Muthoot Finance (which surged owing to a relaxation by the RBI in gold loans norms) and Axis Bank appears to have done the trick.
At the end of the day, credit for the superlative performance has to go to splendid stock selection across sectors. The point is that if we haven’t been able to achieve the same rate of return, we need to take a long and hard look at our stock picking abilities (or the lack of it)!!
It would be good if we can go and see where these funds in last year (2012-13). May be in the bottom quartile.
I am also keen to see where they were in the last year. Will do some number crunching. Personally speaking, I have missed the bus in all of them, except a recent SIP of mine in Mirae. Question is – can we trust them to deliver over a 3 or 5 year term and start an SIP? Would like to know the expert view of Arjun.
Their returns are obviously above average in compression to the expectations of a passive investor . However buying and holding some bluechip stocks across the sectors would give you better returns in 3-5 years . Mutual funds performance will not be commensurately same as that of this year for always .