Bank of India Mid & Small Cap Equity & Debt Fund: A top performing hybrid fund with unique asset allocation
Bank of India Mid & Small Cap Equity & Debt Fund is a uniquely positioned as the only hybrid fund which predominantly invests in mid and small cap stocks in the equity portion of its portfolio. While mid and small caps are more volatile than large cap stocks, the fixed income allocation of the fund acts as a cushion in volatile market conditions. The unique asset allocation of the fund has made it one of the top performing aggressive hybrid funds over long investment tenures. In this article, we will review Bank of India Mid & Small Cap Equity & Debt Fund.
Small & Midcap – Risk versus Return
The chart below shows the 3 year rolling returns of Small & Midcap (represented by Nifty Midsmallcap 400 TRI) index versus the large cap index (Nifty 100 TRI) over the last 20 years. You can see that the Small & Midcap outperformed out large cap in most periods.
Source: Advisorkhoj Research, NSE, as on 30th November 2025
The table shows the rolling returns statistics of Small & Midcap versus large cap indices for different investment tenures over the last 20 years. You can see that despite giving higher returns, small and midcaps has bigger drawdowns / lower minimum returns compared to large caps. Small and midcaps have the potential of giving higher returns, but you should be prepared for higher volatility.
Source: Advisorkhoj Research, NSE, as on 30th November 2025. Large cap is represented by Nifty 100 TRI. Small / Midcap is represented by Nifty Midsmallcap 400 TRI
Volatility reduces over long term
The table below shows the rolling returns distribution of Small & Midcap versus large cap indices for different investment tenures over the last 20 years. You can percentage instances of negative return reduces over longer investment tenures. If you have long investment horizons for mid and small caps, then you will be rewarded with higher returns.
Source: Advisorkhoj Research, NSE, as on 30th November 2025
Debt in asset allocation reduces volatility
While large caps are relatively less volatile than small and midcaps, debt has even lower volatility (see the table below).
Source: Advisorkhoj Research, NSE, as on 30th November 2025
The chart below shows how a hypothetical hybrid fund with 70% equity (Nifty 100 TRI) allocation and 30% debt (CRISIL Short Term Bond Index) participated in the market upside and also cushioned downside risks in volatile markets.
Source: Bank of India MF, as on 30th June 2025
Bank of India Mid & Small Cap Equity & Debt Fund outperformed the broad market index
The chart below shows the growth of Rs 10,000 investment in Bank of India Mid & Small Cap Equity & Debt Fund versus the broad market index, Nifty 50 TRI since the inception of the fund. You can see the fund was able to outperform broad market index despite its debt in its asset allocation due to small and midcap stocks.
Source: Advisorkhoj Research, NSE, as on 2nd December 2025
Limited downside risks for investors
The asset allocation of the fund limited downside risks for investors in volatile markets compared to the small & midcap benchmark (see the chart below).
Source: Advisorkhoj Research, NSE, as on 2nd December 2025
Bank of India Mid & Small Cap Equity & Debt Fund outperformed peers over long investment tenures
The chart below shows the 5 year rolling returns of the fund versus the category average rolling returns of hybrid aggressive funds. You can see that the fund outperformed the category average across periods / market conditions.
Source: Advisorkhoj Research, as on 30th November 2025
The fund was able to provide better risk return trade off to investors compared to the category average (see the table below).
Source: Advisorkhoj Research, as on 30th November 2025
Strong consistency in quartile rankings
Bank of India Mid & Small Cap Equity & Debt Fund ranked in the top 2 quartiles, 8 times in the last 12 quarters, including 6 quarters in the top quartile (see the graphic below)
Source: Advisorkhoj Research, as on 30th September 2025
Current Portfolio Positioning
Source: Bank of India MF, as on 30th October 2025
Wrapping up – Why invest in Bank of India Mid & Small Cap Equity & Debt Fund?
Who can invest in Bank of India Mid & Small Cap Equity & Debt Fund?
- Investors saving for long term financial goals like retirement, children’s education or house purchase
- Investors who want to benefit from equity upside and debt protection during market swings
- Suitable for investors who want high returns of midcaps and small caps but are afraid to enter due to volatility
- Mid aged investors looking for growth with stability.
Investors should consult with their financial advisors or mutual fund distributors if Bank of India Mid & Small Cap Equity & Debt Fund is suitable for their investment needs.
Mutual Fund Investments are subject to market risk, read all scheme related documents carefully.
Bank of India Investment Managers Pvt. Ltd. has continuously proved to be trustworthy with 15 years of rich experience in fund management and has always catered to the needs of the investors across various objectives, thus leading to a portfolio of 18 varied Mutual Fund Schemes with 3.4 lakhs+ investors and ₹ 5,225.12 crores assets under management (as on September 30, 2023) and 12 branches across PAN India as on September 30, 2023.
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