Small- & mid-cap funds top honours’ tally - CRISIL Survey

Small- & mid-cap funds top honours’  tally

Equities were the toast of the financial markets in the quarter ended June, helped by expectations of a stable government in the lead-up to the general elections and a vindication thereof. The broad market, as represented by the CNX Nifty, gave 13.67% returns in the quarter. Equity funds, as measured by the CRISIL–AMFI Equity Fund Performance Index, also showed an uptrend, helped by positive sentiment in the underlying market.

Among general equity funds, the small- and mid-cap category logged the most gains. CRISIL–AMFI Small & Midcap Fund Performance Index, which represents the performance of small and mid-cap funds, appreciated 28.99% during the quarter, significantly higher than the CRISIL–AMFI Large Cap Fund Performance Index (up 18.92%) and CRISIL–AMFI Diversified Equity Fund Performance Index (up 23.95%) (see Table 1).

What helped small and mid-cap stocks outperform the broader market? Attractive valuations coupled with positive market sentiment. For instance, the PE multiple of CNX Midcap was 14.3x on March 31, 2014, a perceptible discount to its historical peak of 26.3x in January 2008.

While CRISIL–AMFI Small & Midcap Fund Performance Index outperformed the broad market - CNX 500 (up 18.69%), it could not beat the category benchmarks CNX Midcap Index (up 30.32%) and CNX Smallcap Index (up 48.41%). The underperformance was mainly due to average exposure of about 22% to large-cap stocks (top 100 stocks based on daily average market capitalisation on the National Stock Exchange).

Within the small- and mid-cap category, CRISIL Fund Rank 1 funds (as of the quarter ended June 2014) were overweight on sectors such as industrial products and chemicals. The average over-exposure of CRISIL Fund Rank 1 funds vis-à-vis the category average to these sectors during the quarter was 4.91% and 3.10%, respectively. This helped them outperform the category.

At the fund house level, Birla Sun Life Mutual Fund led the tally of top-ranked funds for the quarter with eight funds under CRISIL Fund Rank 1, followed by UTI Mutual Fund with six, and ICICI Prudential Mutual Fund and Reliance Mutual Fund with five funds each. The latest CRISIL Mutual Fund Ranking covers close to 90% of the average assets under management of open ended schemes at the end of June.

Unlike most other ranking models, which are based on returns or net asset value (NAV), CRISIL Mutual Fund Ranking uses a combination of NAV and portfolio-based attributes for evaluation. This provides a single-point analysis of mutual funds, taking into consideration key parameters such as risk-adjusted returns, asset concentration, liquidity, asset quality and asset size. The rankings also include categories that focus specifically on long-term consistency in performance. The ranks are assigned on a scale of 1 to 5, with CRISIL Fund Rank 1 indicating ‘very good performance’. In any peer group, the top 10 percentile of funds are ranked as CRISIL Fund Rank 1 and the next 20 percentile are ranked as CRISIL Fund Rank 2. For further details on rankings and methodology, investors can refer to www.crisil.com.

Table 1: Category and Benchmark Returns (%) - quarter ended June 2014

Categories	3 months Absolute	6 months Absolute	9 months Absolute	1 Year Absolute	2 Years Annualised	3 Years Annualised	5 Years Annualised
CRISIL – AMFI Equity Fund Performance Index	22.83	31.69	50.67	47.67	25.69	14.54	16.34
CRISIL – AMFI Large Cap Fund Performance Index	18.92	26.85	41.95	39.81	23.29	13.12	14.84
CRISIL – AMFI Diversified Equity Fund Performance Index	23.95	32.78	53.12	49.40	25.75	14.03	15.94
CRISIL – AMFI Small & Midcap Fund Performance Index	28.99	40.10	66.05	62.74	31.84	19.47	21.20
CRISIL – AMFI ELSS Fund Performance Index	23.96	33.44	53.76	51.21	27.59	16.08	17.17
Thematic – Infrastructure	33.44	45.86	73.20	57.08	20.35	7.78	6.39
CRISIL – AMFI Balance Fund Performance Index	21.20	28.98	47.60	42.24	23.08	14.29	16.67
CNX NIFTY Index	13.67	20.99	32.71	30.28	20.05	10.45	12.14
CNX 500 Index	18.69	26.01	40.58	36.87	21.64	10.92	12.21
CNX Midcap Index	30.32	38.53	58.57	51.13	22.82	11.65	15.37
CNX Smallcap Index	48.41	59.12	96.75	85.40	26.78	13.70	15.11
CNX INFRASTRUCTURE	28.97	36.14	57.93	49.55	18.13	2.66	-0.93
CRISIL Balanced Fund Index	10.19	15.86	24.08	20.99	15.82	9.93	10.57

Table 2 - CRISIL Fund Rank 1 Schemes

Large Cap-oriented Equity Funds	Long Term Income Funds
Birla Sun Life Long Term Advantage Fund	HDFC High Interest Fund - Dynamic Plan
Birla Sun Life Top 100 Fund	Reliance Dynamic Bond Fund
BNP Paribas Equity Fund	Tata Income Fund
Quantum Long-Term Equity Fund
	Short Term Income Funds
Diversified Equity Funds	HDFC Short Term Opportunities Fund
Birla Sun Life Equity Fund	Tata Short Term Bond Fund
Franklin India High Growth Companies Fund
ICICI Prudential Exports and Other Services Fund	Credit Opportunities Funds
Principal Growth Fund	Franklin India Short Term Income Plan
Tata Ethical Fund
	Ultra Short Term Debt Funds
Small- and Mid-cap Equity Funds	ICICI Prudential Flexible Income Plan
Birla Sun Life Pure Value Fund	Reliance Money Manager Fund
Franklin India Smaller Companies Fund	Religare Invesco Credit Opportunities Fund
Reliance Small Cap Fund	UTI Treasury Advantage Fund
Thematic - Infrastructure Funds	Liquid Funds
Birla Sun Life Infrastructure Fund	Canara Robeco Liquid
	ICICI Prudential Liquid Plan
Equity-Linked Savings Scheme (ELSS)	ICICI Prudential Money Market Fund
Axis Long Term Equity Fund	SBI Premier Liquid Fund
Reliance Tax Saver Fund
	Consistent Performers - Equity Funds
Index Funds	Birla Sun Life India GenNext Fund
Kotak Nifty ETF	Birla Sun Life MNC Fund
	Birla Sun Life Top 100 Fund
Balanced Funds	Reliance Equity Opportunities Fund
HDFC Balanced Fund	SBI Emerging Businesses Fund
	Tata Ethical Fund
Monthly Income Plan – Aggressive	UTI Equity Fund
HDFC Monthly Income Plan - LTP	UTI MNC Fund
UTI MIS Advantage Plan	UTI Opportunities Fund
Long Term Gilt Funds	Consistent Performers - Balanced Funds
IDFC G Sec Fund - Investment Plan	ICICI Prudential Balanced Fund
IDFC G Sec Fund - PF Plan
	Consistent Performers - Debt Funds
	IDFC Dynamic Bond Fund
	UTI Bond Fund