Small and mid cap funds outperform broader markets in last three months

The Equity (Mid and Small Cap) fund universe as defined by Value Research has outperformed the broader markets, over the last three months. While the mid and small cap universe has given a return of 9.82%,, the Nifty has moved up by 4.66% in the same period. This improvement in performance comes after a long time. Over the last one year, mid cap stocks were shunned by investors due to poor corporate governance and a slowdown in the economy. “In a slowing economy, large cap companies with stronger balance sheets are better positioned. Hence investors stuck to large caps,” explains, Alok Ranjan, Portfolio Manager, Way2Wealth. However going forward mid cap stocks could outperform large cap stocks.

“Midcaps with quality management and low leverage are likely to do better than large caps. With the domestic economic growth slowdown, multiple scams and elevated global economic risks, investors have must emphasise on quality,” says Vivek Mahajan, Head of Research, Aditya Birla Money.