Investor Issues
Micro, small-cap oriented funds outshine in bull market

In a clear sign that we are in an extended bull market, funds with predominant exposure to growth stocks have outperformed the rest by a huge margin

When mutual funds with a predominant focus on growth stocks like micro, small and mid-cap stocks completely outshine funds with a large-cap bias, one can be certain that the bulls are out in full force in the stock markets.

Moneylife ran a study on the performance of equity-diversified funds between December quarter of last year and March quarter of this year. It is interesting to note that seven out of the top ten performing funds have a bias towards growth stocks, that is, micro, small or mid-cap stocks.

DSP BlackRock Micro Cap Fund emerged the top performer, with absolute returns of 13% compared to its benchmark (BSE Small Cap) returns of 2%. Religare Mid N Small Cap Fund (up 9%) and ICICI Emerging STAR Fund (up 8%) are the next best performers, beating their respective benchmarks (CNX Mid Cap and CNX Nifty Junior), which returned 4% each.

Canara Robeco FORCE Fund is also among the top performers, with returns of 8% over this period, compared to its benchmark’s (S&P Nifty) returns of 1%. The other growth-stock oriented funds in the top ten include IDFC Small and Mid Cap Equity Fund, ICICI Prudential Discovery Fund (up 7% each) and Religare Mid Cap Fund (up 6%).

It is only during an extended rally that small and micro-cap stocks exhibit such stellar performance. The moment the market’s fortunes take a turn for the worse, these very stocks are beaten down the most. The very same funds will then exhibit a different performance altogether. As such, it is important that their current run is not extrapolated too much. Any signs of weakness in the markets should be enough to throw these stocks out of gear.

Among the worst performing funds, JM has taken the cake by throwing up the worst five performing funds in the equity diversified space. All these funds have underperformed their respective benchmarks. These include the JM Emerging Leaders Fund (-6%), JM Core 11 Fund (-5%), JM Small & Mid Cap Fund (-5%), JM Mid Cap Fund (-5%) and JM Multi Strategy Fund (-5%).

These underperformers are followed by the Reliance Natural Resources Fund, which is actually a sector fund, concentrating on companies engaged in discovery, development, production and distribution of natural resources. It has given returns of -3%, compared to its benchmark’s (BSE 200) returns of 1%. Bharti AXA Equity Fund, Taurus Bonanza Fund and Sundaram BNP Paribas SMILE Fund have also witnessed similar underperformance.



aniruddha naha

7 years ago


I went through your article. I would like to know how these funds have performed on a 2 year and 3 year period basis, which would include periods when the markets were really weak?

Financial castles in the air-III

Builders are offering ‘guaranteed’ returns—and rebates— to home-buyers in return for upfront payments even for under-construction properties. This is the third part of a continuing series

DLF, the official sponsor of the Indian Premier League (IPL), is trying out different financial moves to run its core business, real estate. It is offering different rebates for its various properties if homebuyers pay almost 95% of the basic sale price (BSP) within one month of booking a property.  

A real-estate agent from New Delhi told Moneylife that DLF is offering 10% rebate on the BSP for its residential project −‘New Town Heights, DLF Gurgaon’, by offering a down-payment scheme. The customer has to pay Rs5 lakh at the time of booking the property; 97.5% of the sale price within 30 days and remaining 2.5% can be paid when the customer receives the occupation certificate. Currently, the price of the project is Rs2,150 per square feet.

Recently, the Delhi High Court asked market watchdog Securities and Exchange Board of India (SEBI) to probe a ‘mis-statement’ in DLF’s Red Herring Prospectus while it had launched its initial public offering (IPO) in 2007.

The developer is also offering a higher rebate of 10.50% for its ‘River Valley’ residential apartment project at Panjim in Goa, while it is offering a 10% rebate for its ‘Express Greens I & II’ project in Gurgaon, according to the real-estate agent.

For the River Valley project, the consumer is supposed to pay Rs2,50,000 for a one bedroom, hall & kitchen (BHK) flat, Rs4,00,000 for a two-BHK and Rs5,00,000 for a two-and-a-half BHK, at the time of booking. The remaining 95% of sale price has to be shelled out within two months after booking the flat. The remaining 5% including interest-bearing maintenance security (IBMS) charges, stamp duty & registration charges and other charges have to be paid at the time the company hands over the occupation certificate.

According to DLF’s website, for the ‘Express Greens I & II’ project, the applicant has to pay Rs5 lakh at the time of booking an apartment in the tower; 95% of sale price within 30 days; 2.5% of the sale price when the occupation certificate is applied for, and 2.5% of the sale price (including IBMS, stamp duty and registration) at the time of receipt of the occupation certificate. Currently, the prices of the Gurgaon apartments are Rs2,250 per sq ft.
(This is what DLF’s website says: See here)


3G or 4G: What will be the final call?

Mobile operators in India are battling for 3G spectrum—while the world is getting 'hands on' experience on 4G technology. Moreover, going by the telecom minister's statement, mobile operators will have to be ready to shell out more money for 4G even as they roll out 3G networks

Even as mobile operators in India are battling with each other for 3G spectrum, the world is gearing up for 4G technology. In February, the Telecom Regulatory Authority of India (TRAI) had also started consultation for the next level of telecom services or 4G, which offers download at faster speeds (ultra-broadband) and high-definition video on demand, among other such services.

Even as the bidding process for 3G spectrum is going on, the minister for telecommunications A Raja's statement regarding 4G is sure to disturb incumbent mobile operators. According to media reports, Mr Raja has said that the auction for 4G spectrum will begin as soon as operators roll out their 3G networks. This means that operators, who are spending huge sums for acquiring 3G spectrum, will have to shell out even more for 4G spectrum—immediately after rolling out their 3G networks.

"Given the supply-demand mismatch (for three 3G spectrum slots) and its importance from a long-term growth perspective, we expect significant overbidding to take place. We expect the auction amount to reach Rs80,000 crore compared with the base price of Rs35,000 crore at a pan-India level. We expect all the leading operators to strive to get 3G spectrum in most of the key circles such as ‘Metro’ and ‘Circle A’ areas. Failing to win 3G spectrum in these areas could place them at a disadvantage versus competing players. As a result, operators will likely end up bidding aggressively, incurring higher cash outflows," said Ambit Capital Pvt Ltd, in a research note.

TRAI chairman, JS Sarma, while rolling out the consultation process for 4G, had said,"3G has been delayed badly. I don't want 4G or LTE (Long Term Evolution) to meet the same fate. Other countries are catching up with 4G and that is why we are taking advance action."

In fact, a number of foreign players like US-based Motorola and Ericsson have already started testing 4G or LTE technology in various parts of the world. To be more precise, on 3 March 2009, Lithuanian Radio and TV Centre (LRTC) announced the first operational 4G mobile WiMAX network in Eastern Europe. This was followed by Swedish-Finnish network operator TeliaSonera and its Norwegian brand name NetCom (Norway). These network operators, on 14 December 2009, deployed the first commercial LTE in Scandinavian capitals Stockholm and Oslo.

Back home, mobile operators are in dire need of cash flows, not only for deployment of 3G networks, but also to win the bids. According to the Department of Telecommunications (DoT), on Tuesday—the fourth day of bids—the price for a pan-India licence rose 31% to Rs4,582 crore over the base price of Rs3,500 crore. The Indian government has set itself a target of Rs35,000 crore by selling 3G spectrum and broadband and wireless access (BWA) services.

The Gujarat circle, for the first time since the e-auction started, moved to the top in the provisional winning bid price at Rs459.52 crore against Delhi's Rs437.65 crore. Telecom players have been showing keen interest in Delhi, Mumbai, Maharashtra, Gujarat, Andhra Pradesh, Karnataka and Tamil Nadu circles out of the total 22 circles.

Ratings agency CRISIL has said that large debt funding of the additional investment on 3G spectrum licenses may exert pressure on the financial risk profiles of CRISIL-rated players over the near to medium term. The pressure on the players’ financial risk profiles will be offset by their strong cash flows, underpinned by a mature pan-Indian presence for most rated players or support from their parents, it added.

In technical terms, 3G allows simultaneous use of speech and data services and higher data rates of up to 14 megabits (Mbits) per second on downlinks and 5.8 Mbits per second on uplinks. On the other hand, 4G offers a data rate of at least 100 Mbits per second. While 3G allows services like wireless broadband access, multimedia messaging service (MMS), video chat and mobile TV—4G, in addition, can offer new services like HDTV content, minimal services like voice and data, and other services that utilise high bandwidth. 4G may also allow roaming with wireless local area networks, and can be combined with digital video broadcasting systems.




7 years ago

Its very information. A comparison table of 3G & 4G will be good if added

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