Small cap schemes outperform marts

The equity small cap funds have generated an average return of 11.22 per cent during the last one year as against 0.53 per cent drop in the Bombay Stock Exchange (BSE) small cap index. Similarly, the mid cap funds on an average have given a return of 8.11 per cent as compared to 5.12 per cent gain in the Bombay Stock Exchange (BSE) mid cap index.

On the other hand, the large cap funds have seen their net asset value (NAV) drop by 3.74 per cent during the same period. “We are focussing on quality stocks in both the small and mid cap space. While choosing a particular stock, we look at the quality of management, the long-term competitive advantage that it enjoys and also the long-term growth prospects among others. This is how we are able to reward investors with handsome returns,” said Dinesh Khara, managing director, State Bank of India (SBI) Mutual Fund.

SBI Magnum Midcap Fund has generated a return of 16.40 per cent in the past one year. Other schemes, which have performed really well in this space, include DSP BlackRock Micro Cap Fund and Escorts High Yield Equity Fund. They have given a return of 18.84 per cent and 19.58 per cent respectively.

“There are no enough research reports in the small and mid cap stocks because of which investments flowing into these stocks are also low when compared to large cap stocks. So we are able to find quality companies with attractive price earning ratios and price to book value,” added Mr Khara.