| Tata MF's newly launched fund carries a higher risk like other mid-cap schemes.
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Now it is the turn of Tata Mutual Fund to target the current flavour in equity markets - mid-caps. The fund launched its mad-cap fund on May 19, 2005. The closing date for the issue is June 15. As the name suggests, the fund plans to invest in stocks that are predominantly in the mid-cap space.
Tata MF's equity schemes
Returns in per cent as on June 2, 2005 | | Scheme | 3 months | 1
year | 2
years | 5
years | | Tata Dividend Yield Fund | 4.95 | - | - | - | | Tata Equity P/E Fund | 1.32 | - | - | - | | Tata Infrastructure Fund | 5.21 | - | - | - | | Tata Growth Fund | 3.99 | 74.22 | - | - | | Tata Select Equity Fund - Appr. | 1.68 | 69.72 | 72.93 | 13.97 | | Tata Equity Opportunity Fund | 4.10 | 60.35 | 84.11 |
- | | Tata Pure Equity Fund | 2.86 | 55.30 | 77.45 | 22.65 | | Source: www.mutualfundsindia.com |
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| The companies to be considered for investment in this scheme either fall within the market-cap requirement of the CNX Midcap 200 Index or are included in the index. According to the fund, mid-cap stocks are typically from entrepreneur-driven companies which are better positioned to benefit from economic growth.
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| The rise of mid-caps is well documented with the CNX Midcap 200 Index outperforming all other broad-based indices during the past couple of years.
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| While the index has given a return of 84.17 per cent for a two-year period, the Sensex and the Nifty have returned 44 per cent and 42.54 per cent respectively. The performance over the past one-year has been even more telling with the CNX Midcap 200 returns - at 95.43 per cent - towering above its large-cap peers.
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The fund notes that mid-cap companies are more nimble and can adapt to a changing environment better. The investment rationale also has it that these stocks are available for investment across different industries.
How mid-cap funds fared
Returns in per cent as on June 2, 2005 | | Scheme | 3 months | 1 Year | 2 Years | | Chola Midcap Fund | 5.17 | -- | -- | | Kotak Midcap Fund | 7.66 | -- | -- | | Pru ICICI Em. Star Fund | 11.38 | -- | -- | | Sahara Midcap Fund | 4.46 | -- | -- | | Reliance Growth | 9.95 | 89.85 | 97.39 | | Sundaram Select Midcap | 7.24 | 82.93 | 80.45 | | Franklin India Prima Fund | 6.45 | 80.86 | 83.07 | | UTI Thematic Midcap Fund | 5.29 | 65.65 |
-- | | Birla Midcap Fund | 5.93 | 65.55 | 70.02 | | CNX Midcap 200 | 6.58 | 95.43 | 84.17 |
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| While mid-cap funds as a category have been among the best performing equity diversified funds, they have not been able to outperform their benchmark CNX Midcap 200 Index. The best performing mid-cap fund, Reliance Growth, has managed a return of 89.85 per cent over the past one year. The category average of mid-cap funds stands at 77 per cent.
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| The performance of Tata Mutual Fund's other equity diversified funds is satisfactory, though taken in isolation they haven't fared exceptionally compared with other leading equity diversified schemes.
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| Though over a five-year period Tata's equity fund's returns have lagged their leading peers, over a shorter period, Tata MF's schemes have performed well.
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| Pure Equity Fund, Select Equity Fund and Growth Fund gave returns of 55.30 per cent, 69.72 per cent and 74.22 per cent respectively over the past one year which comfortably place them in the top quartile of diversified funds.
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| Though mid-caps are hot commodity now and the overall economic growth and the earnings growth potential of many companies in the segment augur well for the future, investing in the mid-cap segment involves a higher risk.
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| Also as the assets under management of mid-cap funds shoot up with every passing day, there is a feeling that too much money is chasing too few stocks, which raises concerns on liquidity. |
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