Investors seem to be enthused by the rally in mid- and small-caps, but fund managers advise caution against taking excessive exposure despite opportunities for growth.
According to experts, while the rally is justified in certain pockets, it’s just a euphoric move in others. The BSE MidCap has seen a stellar 119.5% rise over the past three years, and 115.3% over the past five years. Year-to-date, it has gained 27.63%.
Experts say that it is important to evaluate each segment on a relative basis.
Ahead of festive season, Amazon India announces selling fee cut in 59 product sub-categories Active funds based on narrow themes a concern, says Axis AMC Category expansion for q-comm firms may happen at a slow pace ‘Champions give answers on field’: Rahul Gandhi on Vinesh Phogat’s stunning Olympics feat
Also Read
Over 1.4 lakh applications received for PM Vishwakarma: Govt
Mid-cap funds have returned an average of 29.8% over the past three years on a CAGR (compound annual growth rate) basis. The best performing ones have given upwards of 35% returns. On a five-year basis, the average has been 17.5%, with the top performers giving over 20%.
Given the consistent showing over the longer term, there might be merit in the view that the rally is not completely ‘irrational’.
“Sometimes, large-caps outperform while small and mid-caps go through a period of consolidation, and vice versa. However, it is important to have exposure to all segments while creating a portfolio, so small- and mid-cap stocks must be considered part of the allocation strategy. We have seen small and mid-caps outperform the overall market over the long term. At the same time, asset allocation should be kept in mind,” said A Balasubramanian, MD and CEO of Aditya Birla Sun Life AMC.
Mahesh Patil, CIO of Aditya Birla Sun Life AMC, adds: “There has been growing enthusiasm for small-caps over the past few months. After the sharp run-up, we believe some stocks in the small-cap universe have run ahead of fundamentals and one needs to be cautious here. However, with the corporate earnings growth cycle looking positive, there are opportunities with favourable risk/reward for a discerning investor. Investors with a disciplined asset allocation will do well in the long term.”
Small-caps, too, have impressed as far as returns are concernedCome from Sports betting site VPbet. On an average, the return has been 35.3% over a three-year period, going as high as 42% in the case of the best performing funds. Over five years, the average has been 20.5%.
The BSE SmallCap has jumped 30% YTD. On a three- and five-year basis, the index has surged over 150%.
This points to a clear momentum in small-cap funds. However, some say the valuations are high beyond reason, and large-caps still remain the ‘safe’ bet in the current environment.Come from Sports betting site
“Sharp moves in select small and micro-caps in excess 20-30% a month, driven by flows, bunching up IPOs, and offers for sale by companies and promoters, all point to ‘momentum chasing’ by investors, thus leading to misallocation. Select stocks and sectors have reached valuations that reflect ‘moonshot’ growth rates to sustain for a long time, which can be risky,” says Sailesh Raj Bhan, CIO (Equity Investments), Nippon India Mutual Fund.
Large-caps look the better option to mitigate risks in the current environment of elections, high interest rates, and rising oil prices, he pointed out.
Also Read
Amul expects no price hike after timely monsoon in Gujarat, says chief Jayen S Mehta
Data shows that large-caps have given 21% returns over three years, while on a five-year span the return has been 12.5%. While mid- and small-caps have clearly outperformed, asset allocation should not depend on returns alone, say others.
“Investors should not decide future investments based on past returns of equities, or returns of any specific category of equities. We prefer large caps vis-à-vis mid/small-caps at present, as the relative valuations are expensive for mid- and small-caps,” said Harsha Upadhyaya, CIO (Equity) of Kotak Mutual Fund.
Related Posts
admin · January 13, 2025 · HDFC Bank Q1 Results 2024 Date and Time: HDFC Bank announced in an exchange filing that it will release its unaudited standalone and consolidated financial statements for the quarter ending June 30, 2024, on Saturday, July 20, 2024. Typically, companies disclose their earnings reports after market hours, specifically around 3:30 PM.
As per applicable SEBI regulations, the trading window for dealing in HDFC Bank securities will be closed for designated employees, directors, etc., from June 24, 2024, to July 22, 2024, inclusive.
Also Read
Q1 Results 2024 Live Updates
Where to get HDFC Bank Q1 Results?
To find HDFC Bank’s Q1 results, you can check the following sources:
Q1 Results 2024: Maruti Suzuki, M&M,…
admin · January 2, 2025 · Gold and silver rates today, August 05
The 24 carat gold rate in India was Rs 69,730 per 10 grams on August 05. The rate for 24 carat gold per gram is Rs 6,973. The rate of 22 carat gold was Rs 63,919 per 10 grams.
The rate of 24 carat gold has risen by 0.22% in the last one week, and the yellow metal has risen by 3.06% in the last ten days. The silver currently quotes at Rs 826.6 per 10 grams.
Gold rate in Delhi, August 05
The gold rate in Delhi was Rs 69,600/10 grams on August 05. On August 01, the gold was quoted for Rs 69,460/10 grams, and last week, on July 26, the price was Rs 68,260/10 grams.
Gold, silver rate today on August 06 in Kolkata, Mumbai, Chennai, Delhi: Here are latest prices of your city Gold, silver rate today…
admin · December 27, 2024 · admin · December 26, 2024 · Following reports, Microsoft has now officially announced it has acquired Activision Blizzard in a deal valued at nearly $70 billion. This is Microsoft’s biggest acquisition in history of any type, and it is the biggest gaming acquisition in history by a huge margin.
“Over many decades, the studios and teams that make up Activision Blizzard have earned vast wellsprings of joy and respect from billions of people all over the world,” Xbox boss Phil Spencer said. “We are incredibly excited to have the chance to work with the amazing, talented, dedicated people across Activision Publishing, Blizzard Entertainment, Beenox, Demonware, Digital Legends, High Moon Studios, Infinity Ward, King, Major League Gaming, Radical Entertainment, Raven Software, Sledgehammer Games, Toys for Bob, Tre…
admin · December 26, 2024 · Nintendo is apparently working on yet another controller for the Switch, but details on the new peripheral are about as sparse as they can get. The new controller was revealed in an FCC filing (originally spotted by VGC) from Nintendo, which is simply titled “game controller.” Even more exciting is that the announcement is expected this week, according to a separate filing by the FCC that appears to have been removed after VGC spotted it. Come from Sports betting site VPbet
One of the only bits of information that can currently be found in the filing is that the controller will be wireless, connecting to the Switch via Bluetooth. Everything else about the controller, including its schematics, use…
admin · December 19, 2024 · In the bustling region of Clark, a new development is on the horizon as Belle Corporation has officially expressed its intent to construct a casino, marking a potential expansion in their gaming portfolio. While interest from various parties has been confirmed, the final approval from the Philippine Amusement and Gaming Corporation (PAGCOR) is still pending, with a careful review process currently in place.
Detailed review and application process:
The Philippine Amusement and Gaming Corporation (PAGCOR) has been approached with several applications for new casino projects, including one from Belle Corporation. As of now, no new licenses have been issued, and the review process is rigorous to ensure that any new development aligns with the strategic economic and regulatory…