Mid- And Small-cap Funds

Valuation is comfortable for large-caps, but there is little margin of safety in the broader market categories, analysts said

Majority of Indian Large-Cap equity mutual funds failed to beat the benchmark, with 88 per cent of actively managed funds underperforming the S&P BSE 100 in 2022, according to new study by S&P Dow Jones Indices released on Tuesday. In the same period, the benchmark for Indian Equity Mid-/Small-Cap funds -- the S&P BSE 400 MidSmallCap index -- rose 2 per cent in 2022, and 55 per cent of active managers underperformed the index over that period. Further, S&P BSE 200 grew by 6 per cent in 2022, and 77 per cent of Indian ELSS (equity linked saving schemes) funds underperformed the index. According to S&P Indices Versus Active (SPIVA) Funds India Scorecard for 2022, Indian Composite Bond funds fared the best, with 45 per cent underperforming the S&P BSE India Bond index. "Indian markets fared far better than most global markets in 2022, although main equity and fixed income benchmark indices dropped in H1, they staged a remarkable recovery in the second half of the .

Barring the past few months, small-cap and mid-cap funds outperformed significantly, compared to other categories until the start of calendar year 2022

On an average, small-cap funds have generated annualised returns of 67.5 per cent in the last two years

Axis MF, Navi MF and Mirae Asset MF are among fund houses to roll out passive funds focused on mid- and small-cap themes.

The category is volatile; take limited exposure to funds with quality portfolios

These funds account for Rs 56,000 crore of category assets worth Rs 71,700 crore

Twenty-five of 46 such schemes, or 54 per cent, outperformed the benchmark indices

The majority of active funds still outperform their benchmarks and passive funds don't have a long track record in these two segments

One reason for this sound performance is that large-cap funds have done well over the past year and stocks in this segment have become expensive due to a lot of liquidity chasing them

Total flows into MFs up 13% to Rs 9,152 crore; Small-cap funds see 56% surge

Mid- and small-caps have seen a deep correction

The S&P BSE Small-cap Index has fallen 24.78 per cent year-to-date (YTD)

In the current market, there's a high interest in mid- and small-cap companies