Mid-cap boom has UTI MF's sector scheme on song

UTI Mid Cap Fund, the open-ended equity scheme of UTI Mutual Fund launched along with five other sector funds in March this year, has outperformed its big brothers since inception.

UTI Mutual Fund, the biggest mutual fund in the country with an asset base of around Rs 20,400 crore, has launched six sectoral equity fund schemes on March 9, 2004.

These are large-cap fund, basic industries fund, auto sector fund, banking sector fund, PSU fund and mid-cap fund.

According to data released by UTI Mutual Fund, the size of the mid-cap fund is the smallest with only Rs 34.75 crore in the corpus.

The biggest is the basic industries fund with an asset size of Rs 67.58 crore, followed by auto sector fund's Rs 67.40 crore, PSU fund's Rs 63 crore, large-cap fund's Rs 59 crore and banking sector fund's Rs 49.43 crore.

Even though the mid-cap fund was the smallest in size, it stole the show in terms of performance. The fund returned 15.14 per cent since inception to October 30, while the NSE's S&P CNX Midcap 200 index posted a 20 per cent gain in the same period.

The large-cap fund posted a negative return of 4 per cent, while the BSE's Sensex and NSE's S&P CNX Nifty, the key market barometers of big firms, returned -3 per cent and -4 per cent respectively.

The PSU and banking sector funds returned -2.20 per cent and -10 per cent, respectively, while the BSE's PSU index and Bankex, a banking index, returned -10 per cent and -8 per cent respectively.

The basic industries and auto sector funds posted positive gains of 1.30 per cent, 0.80 per cent respectively. The net asset value (NAV) of the mid-cap fund is currently hovering at Rs 11.50-12.00, compared with sub-IPO level (Rs 10 per unit) in the case of other schemes.

The NAVs of the remaining five schemes are currently at: Rs 9.60 for large-cap fund, Rs 10 for basic industries fund, Rs 9.80 for auto sector fund, Rs 9.50 for banking sector fund and Rs 9.60 for PSU fund.

The mid-cap fund has declared a dividend of 10 per cent on October 25. According to the mutual fund sector analysts, the performance of the mid-cap fund is significant because the sensex is currently at the same level where it was during March this year.

"The sensex was around 5,600-5,900 during March. Now it is again touching 5,900. So it clearly shows that good mid-cap stocks have performed well during the interim period, which has witnessed many ups and downs," an analyst said.

The portfolio of the mid-cap fund comprises shares of Thermax, NDTV, Hughes Software Systems, Apollo Hospitals Enterprise, i-flex solutions, Exide Industries, Indo Gulf, IBP, Federal Bank, Ipca Labs, Pfizer, Voltas, Shree Cements, Bharat Forges. The maximum exposure is in Thermax Ltd with around 7 per cent of the NAV.

V Kulkarni, the mid-cap fund's manager, feels that mid-cap stocks are still quoting at a discount relative to their large-cap counterparts.

"In the past five quarters mid-cap stocks have reported strong earnings momentum relative to their large-cap peers. Still mid-cap stocks are quoting at a discount. A selective approach is likely to pay off in mid-cap stocks," he said.