The mutual fund industry saw about 19% of the total inflows coming into midcap funds in the said period. If we were to look at the 2023 period, then midcap funds garnered inflows worth Rs 14,444 crore, according to data shared by the Association of Mutual Funds in India (AMFI).
Aided by this strong inflows and the rally in the midcap stocks, 30 midcap funds have given high double-digit returns in FY24, data analysed by ETMarkets showed. What’s more interesting is that about 330 stocks in which these 30 midcap funds are invested in, have given double-digit returns of up to 98%.
Taurus MF: The Taurus Discovery Midcap fund topped the list, as it has given over 35% returns in absolute terms in FY24 so far. About 36 stocks that are part of this fund have given double-digit returns of up to 89% in the last six months, and one turned into a multibagger, which is REC Ltd.
Nippon India MF: One of India’s top 10 asset management companies turned investors in its midcap fund quite wealthy. The fund has given nearly 33% returns to investors so far in FY24. About 74 stocks that are part of this fund have given double-digit returns of up to 92% in the last six months. The fund chased two multibaggers namely, REC and Cholamandalam Financial Holding.
HDFC MF: The HDFC Midcap Opportunities Fund was also among the list of best performers, giving 31% returns in absolute terms in FY24. About 48 stocks that are part of this fund have given upto 89% returns, and two have turned multibaggers.
Aditya Birla Sun Life MF: The asset management firm’s midcap fund has given more than 30% returns so far in FY24. About 71 stocks that are part of this fund have given double-digit returns of upto 89%. Inox Wind and Cholamandalam Finance, which have given multibagger returns, are also part of this fund.
Mahindra Manulife MF: Mahindra Manulife Midcap fund has given nearly 32% returns in absolute terms in FY24 so far. About 48 stocks that are part of this fund have given double-digit returns of up to 89%. Suzlon Energy, Gujarat Mineral Development, REC Ltd, and Kaynes Technology, which have given 108-181% returns, are also part of this fund.
How long will the madness last?
The market view on the performance of stocks in the midcap and smallcap segments is quite mixed, with many expecting the gains to sustain, while others ringing the caution bell.
Before looking at the way forward, let’s go a few steps back to understand the trajectory in the last two years.
After three years of underperformance between 2017-2020, stocks in the midcap and smallcap segments rebounded in FY21 and FY22 and gave handsome returns. However, the trend changed in FY23, as the Nifty 50 and Nifty Midcap indices delivered flat returns, and the Nifty small-cap 100 declined by about 14%.
Recognizing the undervaluation in mid and smallcaps in light of the improving economic environment, vigilant investors moved their allocation from large caps to mid & small-cap segments of the market, Gopal Kavalireddi, vice president – research at FYERS told ETMarkets.
After such a high upmove in the last 6 months, short-term investors can take their foot off the pedal from infusing fresh funds into some sectors, as the stocks are well-priced or overpriced to their FY24, FY25 earnings, said Kavalireddi.
However, sector rotation in investing is a common phenomenon and is bound to happen, he added.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)