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Top 7 Best Mid and Small Cap Equity Mutual Funds to Invest in 2016: Part 2

Mutual Funds

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Mutual Funds article in Advisorkhoj - Top 7 Best Mid and Small Cap Equity Mutual Funds to Invest in 2016: Part 2
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In the first part of this series, Top 7 Small and Midcap Equity Mutual Funds for investment in 2016: Part 1, we saw the top 7 small and midcap funds, based on CRISIL’s latest mutual fund ranking (for quarter ended March 2016) and also our internal quartile ranking based ranking criteria. Here is a brief re-cap of the top 7 midcap funds.


Brief re-cap of the top 7 midcap funds

Source: Advisorkhoj Research, CRISIL, Morningstar


In this post, we will do a brief review each of these funds

DSP BlackRock Micro Cap Fund

The scheme was launched in 2007 and has been one of the top performing small / midcap funds for several years. The fund has given over 18% annualized returns since inception. The AUM of this fund has crossed 2,500 crores, but DSP BlackRock is controlling the AUM by imposing a limit on the amount of one time purchases (Maximum 2 Lacs per day per PAN number). The expense ratio of the fund is 2.49%. Vinit Sambre and Jay Kothari are the fund managers of this scheme. The chart below shows the 3 year rolling returns of DSP BlackRock Micro Cap Fund over the last 5 years. We have chosen a three year rolling returns period, because investors must have a long investment horizon for investing in equity funds. For midcap funds in fact, investors should have a longer investment horizon than large cap or diversified equity funds.


The fund has not only beaten the benchmark consistently, but the three year rolling returns have consistently been exceedingly good

Source: Advisorkhoj Rolling Returns Calculator


You can see that, the fund has not only beaten the benchmark consistently, but the three year rolling returns have consistently been exceedingly good. From a portfolio perspective, the fund is biased towards small cap segment. From an investment style standpoint, the fund managers invest in growth stocks. While the volatility of the fund is above average, the Sharpe Ratio is excellent (for more scheme performance and other details, please see our fund research page). This has been an investor favorite for the last few years. SIP is the best mode of investment for small and midcap funds, because these funds are intrinsically more volatile. No wonder this fund has been an investor favorite for the last few years.

Please check our Fund review here of DSP BlackRock Micro Cap Fund

Franklin India Smaller Companies Fund

The scheme was launched in 2006 and is another investor favorite in small/midcap space, by virtue of its performance. The fund has given nearly 15% annualized returns since inception. The AUM of this fund is nearly 2,800 crores, which is quite comfortable given that the fund managers invest primarily in midcap companies. The expense ratio of the fund is 2.38%. R Janakiraman, Hari Shyamsunder and Srikesh Nair are the fund managers of this scheme. The chart below shows the 3 year rolling returns of Franklin India Smaller Companies Fund over the last 5 years.


The 3 year rolling returns of Franklin India Smaller Companies Fund over the last 5 years

Source: Advisorkhoj Rolling Returns Calculator


You can see that, the fund has not only beaten the benchmark consistently, but the three year rolling returns have consistently been exceedingly good. From a portfolio perspective, the fund is biased towards midcap segment. From an investment style standpoint, the fund managers invest in growth stocks. Even though the volatility of the fund is below average, the Sharpe Ratio is excellent, indicating excellent risk adjusted performance (for more scheme performance and other details, please see our fund research page).

Mirae Asset Emerging Bluechip Fund

The scheme was launched in 2010 and built a formidable reputation in small/midcap space, by virtue of its performance. The fund has given nearly 22% annualized returns since inception. The AUM of this fund is over 1,460 crores, while the expense ratio of the fund is 2.46%. Neelesh Surana is the fund manager of this scheme. The chart below shows the 3 year rolling returns of Mirae Asset Emerging Bluechip Fund over the last 5 years.


The 3 year rolling returns of Mirae Asset Emerging Bluechip Fund over the last 5 years

Source: Advisorkhoj Rolling Returns Calculator


Like the previous two funds, this fund too has not only beaten the benchmark consistently, but the three year rolling returns have consistently been exceedingly good. From a portfolio perspective, the fund invests in companies whose market cap is at least 100 crores. From an investment style standpoint, the fund manager has a bias for growth stocks. Even though the volatility of the fund is below average, the Sharpe Ratio is excellent (for more scheme performance and other details, please see our fund research page).

Birla Sun Life MNC Fund

This is one of the oldest thematic funds. The fund was launched in 1994 and has 3,220 crores. The expense ratio of the fund is 2.37%. Industry veteran, Ajay Garg, is the fund manager of this scheme. The fund has over 20% compounded annual returns since inception. By investing 1 lac in the fund, at the time of its launch, the investor could have grown his or her wealth by nearly 60 lacs. The chart below shows the 3 year rolling returns of Birla Sun Life MNC Fund over the last 5 years.


The 3 year rolling returns of Birla Sun Life MNC Fund over the last 5 years

Source: Advisorkhoj Rolling Returns Calculator


You can see that, the fund has not only beaten the benchmark consistently, but the three year rolling returns have consistently been exceedingly good. The fund has given more than 20% 3 year rolling returns over the last 5 years. From a portfolio perspective, the fund invests exclusively in securities of multinational companies in order to achieve long term growth of capital at relatively moderate levels of risk. From an investment style standpoint, the fund manager has a bias for growth stocks. The fund has excellent Sharpe Ratio (for more scheme performance and other details, please see our fund research page).

Read the Fund review of Birla Sun Life MNC Fund

Reliance Small Cap Fund

This is another very popular small/midcap fund. We reviewed this fund a few days back (please see our fund review, Reliance Small Cap Fund: More than 2.5 times returns in the last years). The fund has nearly 2,000 crores of AUM and an expense ratio of 2.1%. Industry veteran, Sunil Singhania, also the CIO of Reliance Mutual Fund, is the fund manager of this scheme. The fund has given 18% annualized returns since inception. The chart below shows the 3 year rolling returns of Reliance Small Cap Fund over the last 5 years.


The 3 year rolling returns of Reliance Small Cap Fund over the last 5 years

Source: Advisorkhoj Rolling Returns Calculator


You can see that, the fund has not only beaten the benchmark consistently, but the three year rolling returns have consistently been exceedingly good. The fund has given more than 20% 3 year rolling returns over the last 5 years. From a portfolio perspective, the fund is biased towards small cap segment. From an investment style standpoint, the fund managers invest in growth stocks. While the volatility of the fund is above average, the Sharpe Ratio is excellent (for more scheme performance and other details, please see our fund research page).

You may like to read Fantastic 5 years SIP returns from this marquee fund

Canara Robeco Emerging Equities Fund

This is another popular small/midcap fund from Canara Robeco stable. The fund was launched in 2005 and has nearly 1,000 crores of AUM. The expense ratio of the fund is 2.47%. Ravi Gopalakrishnan is the fund manager of this scheme. The fund has given 17% annualized returns since inception. The chart below shows the 3 year rolling returns of Canara Robeco Emerging Equities Fund over the last 5 years.


The 3 year rolling returns of Canara Robeco Emerging Equities Fund over the last 5 years

Source: Advisorkhoj Rolling Returns Calculator


You can see that, the fund has not only beaten the benchmark consistently, but the three year rolling returns have consistently been exceedingly good. The fund has given more than 20% 3 year rolling returns over the last 5 years. From a portfolio perspective, the fund is biased towards mid cap segment. The fund manager invests in companies whose market cap ranges from 150 to 500 crores. From an investment style standpoint, the fund managers invest in a blend of value and growth stocks. While the volatility of the fund is above average, the Sharpe Ratio is excellent (for more scheme performance and other details, please see our fund research page).

You may like to read 5 years of strong performance by this mid and small cap fund and some of the best smaller sized equity mutual funds

SBI Magnum Midcap Fund

This is another popular small/midcap fund from SBI. The fund was launched in 2005 and has nearly 1,777 crores of AUM. The expense ratio of the fund is 2.55%. Sohini Andani is the fund manager of this scheme. The fund has given 18% annualized returns since inception. The chart below shows the 3 year rolling returns of SBI Magnum Midcap Fund over the last 5 years.


The 3 year rolling returns of Canara Robeco Emerging Equities Fund over the last 5 years

Source: Advisorkhoj Rolling Returns Calculator


You can see that, the fund has not only beaten the benchmark consistently, but the three year rolling returns have consistently been exceedingly good. The fund has given more than 20% 3 year rolling returns over the last 5 years. From a portfolio perspective, the fund is biased towards mid cap segment. From an investment style standpoint, the fund managers invest in growth stocks. Even though the volatility of the fund is below average, the Sharpe Ratio is excellent (for more scheme performance and other details, please see our fund research page).

Conclusion

In this 2 part series, we reviewed the top 7 small and midcap equity mutual funds, based on a combination of CRISIL mutual fund ranking (for the quarter ended March 2016) and our quartile ranking based criteria. Small and Midcap Funds in the right proportion can significantly improve the risk adjusted returns of your overall portfolio, over a long investment horizon (please see our post, What should be the percentage of mid caps in your mutual fund portfolio: Analytical Perspective). Investors should consult with their financial advisors, if the funds discussed in this series, are suitable for their mutual fund portfolios.

Mutual Fund Investments are subject to market risk, read all scheme related documents carefully.

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Dwaipayan Bose

An alumnus of IIM Ahmedabad, Dwaipayan is a Finance and Consulting professional, with 13 years of management experience, mostly in MNCs like American Express and Ameriprise Financial, both in India and the US. In his last role, he was the Chief Financial Officer of American Express Global Business Services in India. His key interests are building best in class organizations, corporate governance and talent development

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