MF buying in 2015 – Mid & Small cap funds

As most of the discussions on the new mode of MF purchase has been centered around the Nifty and Large cap funds, one would have got the impression that SIP mode in general would not have worked in 2015. That is however, not quite true. The Mid cap and Small cap funds fared much better than Large cap funds this year, even with SIP. This has generally been the case over the last few years too, if you look at the data.

Let us look at some data for the Nifty Mid cap 100 index which closed at a value of 13190 on last Friday. 

  • YTD returns and 1 year returns are at 5.04% and 3.60% respectively.
  • 1 week and 1 month returns are pretty much break even, marginally negative.
  • 52 week high and low have a spread of nearly 3000 points.
  • The 30, 50, 150 and 200 DMA all range between 13129 and 13165. Note that all are below current level but not by much.
  • If you had done SIP in a Mid cap fund through 2015 you will be seeing some reasonable gains as most actively managed funds will give better returns as compared to the index.
  • However, the fact remains, you would necessarily have done better if you were tuned into the buying opportunities that presented themselves in 2015.

Even though the current index level is below the DMA values, I will not be in a hurry to invest in Mid cap funds right now. There is a clear possibility for the index level as well as DMA values to recede further going into late December and first half of January.

Let us look at some data for the Nifty Small 100 index which closed at a value of 5474 on last Friday. 

  • YTD returns and 1 year returns are at 4.22% and 2.40% respectively.
  • 1 week return is marginally negative. 1 month is 2.20%.
  • 52 week high and low have a spread of nearly 1500 points.
  • The 30, 50, 150 and 200 DMA all range between 5381 and 5470. Note that all are below current level but not by much.
  • If you had done SIP in a Small cap fund through 2015 you will be seeing some reasonable gains as most actively managed funds will give better returns as compared to the index.
  • However, the fact remains, you would necessarily have done better if you were tuned into the buying opportunities that presented themselves in 2015.

Even though the current index level is below the DMA values, I will not be in a hurry to invest in Small cap funds right now. There is a clear possibility for the index level as well as DMA values to recede further going into late December and first half of January.

How have my own funds done in 2015? Well HDFC Mid cap opportunities and DSP BR Micro cap fund are the two that I have in these categories and they have actually done reasonably well. However, I could have done significantly better in this year through my revised buying strategy.

Take a look at how your funds in these categories have done. For all the volatility that we talk about so relentlessly, it is these categories of funds that have given the best returns in this and the past few years.

 

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