Bank of India Mid and Small Cap Equity and Debt Fund: 3.6X Returns Since Inception

Market Context

Market sentiment has been weak due to headwinds from continuing FII sell-off and depreciatory pressure on the INR. The sharp correction over the past few months has brought valuations to relatively attractive levels, especially in the small and midcap segments. Historical data show that Indian equities may make a strong recovery from deep corrections in the past, e.g., COVID-19. In the current market scenario, small and mid-cap exposure has the potential to generate alpha in your portfolio. Coupled with a strategy that also includes fixed income instruments in the portfolio, can potentially provide stability along with growth. In this article, we will review the Bank of India Mid and Small Cap Equity and Debt Fund, an aggressive hybrid fund that primarily invests in a diversified mix of mid- and small-cap equities (SMID Strategy) and related securities, while also allocating to fixed-income instruments.

Why invest in a fund with an SMID strategy?

• Economic Growth Lever: Domestic growth, manufacturing, capex, exports, and consumption themes often reflect strongly in SMID companies.


• Sector Diversification: SMID businesses have wider sector coverage (see table below)
  
  

  

  Source: NSE Website, Nifty Mid Small-cap 400 TRI, Nifty 100 TRI. Data as of 31^st March, 2026.



• SMID Strategy has showcased a broader opportunity set: The Mid & Small Caps over long term have generated relatively higher return opportunities as compared to Large Caps.
  
  

  

  Source: ACEMF (Rolling Returns). Returns are Compounded Annualised Growth Rate (CAGR). Large Cap is represented by Nifty 100 TRI; SMID is represented by Nifty Mid Small 400 TRI. Hybrid SMID+ Debt is represented by Nifty Mid Small 400 TRI (70%) plus Debt is the Crisil Short Term Bond Index (30%). Time Period: July 20, 2016 - Mar 31, 2026. Past performance may or may not be sustained in the future.



• Capture Future Leaders: Future Large-cap winners start as small/mid-cap companies; early participation may have higher Alpha opportunity


• High Growth Potential: SMID companies benefit from expansion, market share gains, new products, and formalization of the economy


• Potential Alpha Generation: A larger set of companies, with most of the IPO opportunity, new sector, and higher upside potential, leads to higher return capability


• Volatility Reduces Significantly Over Long Term: Over the long term, an SMID strategy has the potential to significantly reduce volatility, in comparison to a strategy with large-cap +Debt mix. (see graphic below)
  
  

  

  Source: ACE MF (Rolling Returns). Returns are Compounded Annualised Growth Rate (CAGR). Large Cap is represented by Nifty 100 TRI; SMID is represented by Nifty Mid Small 400 TRI (70%) plus Debt is Crisil Short Term Bond Index (30%) Volatility/Risk is calculated based on daily returns and is annualized. Standard deviation is a statistical measure of the range of an investment’s performance. Time Period: March 31 2015 – March 31 2026.



• Debt manages volatility relatively well: The inclusion of debt instead of large caps in the portfolio manages volatility relatively well. (see table below)
  
  

  

  Source: ACEMF (Rolling Returns). Returns are Compounded Annualised Growth Rate (CAGR). Large Cap is represented by Nifty 100 TRI; Mid Cap is represented by Nifty Midcap 150 TRI;; Small Cap - Nifty Small cap 250 TRI; and Debt - Crisil Short Term Bond Index. Time Period: March 31 2015 – March 31 2026



• Small and Mid Caps are Under-researched Vs Large Caps: Mid-Caps have limited analyst coverage which results in pricing inefficiencies and hidden opportunities. They also have Information asymmetry, which may generate better opportunity, and in-depth research can lead to early-stage discovery. Mid-Caps have higher potential for alpha generation; more room for fundamental research to add value.

Bank of India Mid and Small Cap Equity and Debt Fund

The Bank of India Mid and Small-Cap equity and Debt fund was launched in July 2016. The fund is managed by Mr. Alok Singh. The fund has an asset under management of Rs 1551.03 Cr (as of 12^th June 2026). It is an open-ended hybrid scheme investing primarily in a diversified mix of mid & small-cap equities (SMID Strategy) and related securities (65-80% allocation) while also allocating to fixed-income debt and money market instruments (20- 35% allocation). This ensures long-term capital appreciation due to the equity exposure coupled with downside protection offered by the debt side of the fund. Investors can thus benefit from this diversified approach to investing and enjoy reasonable stability even in volatile markets. The Bank of India Mid and Small Cap Equity and Debt Fund tracks the benchmarks NIFTY Mid Small cap 400 Total Return Index (TRI): 70%; CRISIL Short Term Bond Index: 30%.

Wealth Creation

A lumpsum investment of Rs 1 Lakh in the fund at its inception, would have grown to Rs 4 lakhs as of 12^th June 2026, giving a CAGR of 15.07%.

A monthly SIP of Rs 10,000/- started in the fund at its inception, you would have accumulated a corpus of Rs 27.70 lakhs as on 12^th June 2026 against a cumulative investment of Rs 11.9 lakhs, and an XIRR of 16. 38%. The chart below represents the growth of your investment since July 2016.

Source: Advisorkhoj research as of 12^th June 2026

Consistent Outperformance vs the Category

The chart below shows how the Bank of India Mid and Small Cap Equity and Debt Fund has consistently outperformed all the other funds in its category across various time periods.

Source: Advisorkhoj research as of 12^th June 2026

Outperformance Vs the Benchmark

• The chart below shows how the fund has outperformed its benchmark in most instances since its launch.
  
  

  

  Source: Advisorkhoj research as of 12^th June 2026



• The chart below shows that the fund has generated superior returns vis-a-vis the benchmark well as the broad market
  
  

  

  Source: Fund Factsheet March 31, 2026. Above performance is for the Regular Plan of the scheme. BENCHMARK 65 5 Years Nifty Mid-Small cap Since Inception 400 TRI (70%) & CRISIL Short Term Bond Fund Index (30%). Past Performance may or may not be sustained in the future.

Quartile Ranking

The fund featured in the top quartile in 6 out of the 10 years since its launch (see chart below)

Source: Advisorkhoj research as of 12^th June 2026

Market Capture Ratio: Superior Risk-Adjusted Returns

Market rallies and crashes are both realities of equity investing. A mutual fund scheme that outperforms both in up markets and down markets is likely to give superior risk-adjusted returns and outperform other funds in the long term. Performance in different market conditions is measured by a set of metrics called market capture ratios. The upmarket ratio of the Bank of India Mid and Small Cap Equity and Debt Fund in the last 5 years was 140, showing that if the market rose by 1%, the fund gave a return of 1.4%. The downmarket ratio of the fund in the last 5 years is 89%, which means that for every 1% fall in the markets, the fund only fell by 0.89%. This shows the superior risk-adjusted performance of the fund.

Lower Drawdown

Investment Approach

Distinctive Portfolio Construction Approach

• 70-80% of the portfolio is invested in mid and small-cap companies


• The fund is not allowed to invest in large-cap companies


• 20% of the portfolio is invested in Debt with a duration of around 2-4 years


• As and when any midcap allocation becomes a large cap, the fund exits those stocks


• Portfolio is normally allocated in 40-50 stocks

Equity Investment Approach

Tactical Debt Allocation Approach

Maturity has been managed tactically across market circumstances.

Current Equity Portfolio

Source: Fund Factsheet as of 30^th April 2026

Who should invest in Bank of India Mid and Small Cap Equity and Debt Fund?

• Investors who want capital appreciation and income over long investment horizons.


• Investors who do not want too much volatility in their investments e.g. new investors.


• Investors who aim to earn better returns compared to traditional savings products albeit with higher risks.


• Investors who have a moderately high to high-risk appetite.


• Investors should have minimum 3-to-5-years of investment horizon.

Consult with your financial advisors or mutual fund distributor to determine if the Bank of India Mid and Small Cap Equity and Debt Fund is suitable for your long-term investment needs.