Small-cap and mid-cap underperformance continued this week. S&P BSE SmallCap Index was down 3.38% this week compared to a decline of 1.41% in the Nifty 50 Index. The small-cap underperformance is a global phenomenon and the recent equity returns have been driven by large-caps in almost all markets. In the US the S&P SmallCap 600 Index has underperformed the S&P 500 Index by about 18% over the last year.
NSE
The small-cap underperformance in India has been slightly more extreme. The S&P BSE SmallCap Index has underperformed the Sensex by about 20.5% over the last year. More aggressive small-cap portfolios have fared worse drawdowns of 30-40%. A more interesting phenomenon is also surfacing on social media - Portfolio Managers who claimed a lot of alpha due to process, stock selection and intelligence during the run-up in the small-cap space are now running around looking for any and all external reasons on why their portfolio is underperforming. This indeed is a feature of the markets as well. The upside is always presented as skill, while downside needs to be looked through the lens of bad luck or external dominating factors.
Since 2017, we have stayed away from recommending small-cap or mid-cap funds in our ideal portfolio. And even today, we are not convinced they deserve a place in your asset allocation.
Nippon Life Insurance has received approval from the Competition Commission of India
for the acquisition of up to 75% stake in Reliance Nippon Asset Management. Additionally, the Japanese insurer is set to acquire 100% stake in Reliance Capital Trustee Company and Reliance Capital AIF Trustee Company, both wholly-owned subsidiaries of Reliance Capital.
Index Returns
| Index | Weekly open | Weekly close | Change |
| BSE Sensex | 38,736.23 | 38,337.01 | -1.03% |
| Nifty | 11,582.90 | 11,419.25 | -1.41% |
| S&P BSE SmallCap | 13,776.58 | 13,310.35 | -3.38% |
| S&P BSE MidCap | 14,553.88 | 14,078.34 | -3.27% |
Source- BSE/NSE
Top 5 best performing funds
| Name | Week | 3Y | Category |
| Kotak World Gold | 7.0% | -8.4% | Fund of Funds |
| DSP World Gold | 3.4% | -7.0% | Fund of Funds |
| IPRU Technology | 2.5% | 15.4% | Sectoral |
| Franklin India Technology | 1.8% | 13.6% | Sectoral |
| Franklin Asian Equity | 1.7% | 10.6% | Sectoral |
Source – Kuvera.in
Top 5 worst performing funds
| Name | Week | 3Y | Category |
| Sundaram Small Cap | -5.3% | 1.3% | Small Cap |
| UTI Transportation & Logistics | -4.4% | -1.0% | Sectoral |
| IDFC Sterling Value | -4.1% | 10.9% | Value |
| Reliance Banking | -4.0% | 16.3% | Sectoral |
| Invesco India Small Cap | -3.9% | NA | Small Cap |
Source – Kuvera.in
What investors bought
We saw the most inflows in these 5 Funds –
| Name | 1Y | 3Y | Category |
| Mirae Asset Large Cap | 10.4% | 14.7% | Large Cap |
| Parag Parikh Long Term Equity | 2.9% | 13.5% | Multi Cap |
| Kotak Standard Multicap | 7.1% | 13.6% | Multi Cap |
| HDFC Small Cap | -3.7% | 14.0% | Small Cap |
| Mirae Asset Tax Saver | 12.2% | 18.7% | ELSS |
Source – Kuvera.in
What investors sold
We saw the most outflows in these 5 Funds –
| Name | 1Y | 3Y | Category |
| Franklin India Equity | 1.3% | 7.7% | Multi Cap |
| ABSL Equity Hybrid 95 | 2.3% | 8.3% | Hybrid |
| Franklin Smaller Companies | -7.3% | 13.3% | Small Cap |
| Sundaram Large & Mid Cap | 4.5% | 13.5% | Large & Mid Cap |
| IPRU Value Discovery | 1.4% | 6.6% | Value |
Source – Kuvera.in
Movers & Shakers
1/YES Mutual Fund has announced that Amit Deshmukh has been designated as Chief Financial Officer (CFO) for YES Asset Management.
2/ IDFC Mutual Fund has appointed Pradeep Kumar and Jaimini Bhagwati as Independent Directors on the board of IDFC AMC Trustee Company.
3/ Mirae Asset Mutual Fund has announced that Puneet Bhatia ceased to be the Head – Real Estate and Key Personnel of the AMC Trustee Company.
4/ Reports suggest that Sachin Bansal, the former co-Founder of Flipkart, is in talks with Essel Finance for acquiring Essel Mutual Fund.
Gaurav Rastogi is the CEO of Kuvera.in: India’s first completely free Direct Mutual Fund investing platform.
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