A look at the one-year track record of funds investing in Indian equities reveals that four of the top five gainers are those with significant exposure to small- and mid-cap companies.
All of the top five performing funds have managed to beat their respective benchmark indices.
Below is the list of the five outperformers over the past 12 months according to FE Analytics data.
JPMorgan Indian Smaller Companies Fund
Leading the pack is the JPMorgan Indian Smaller Companies Fund with a 94.7% return over the past 12 months. Managed by Rajendra Nair and Rukhshad Shroff since December 2006, the fund has $83m in assets. Data over the past three years shows that the fund also performed well with a 73.9% return.
The top five stocks picks of the managers are are JK Lakshmi Cement, Mahindra & Mahindra Financial Services, consumer discretionary companies like EIH and Hitachi Home and Life Solutions along with automobile manufacturer Ashok Leyland.
Financials (26.5% weighting), consumer discretionary (20.9%) and industrials (17.9%) are the favoured sector bets.
DSP BlackRock Small & Mid Cap
The DSP fund benchmarked against the CNX Midcap Index has registered an 81.4% return over the past year.
Portfolio managers Anup Maheshwari and Apoorva Shah, who have been managing the fund since 2008, have a preference for textile company Arvind Mills (4.4% weighting) followed by Ashok Leland (4.4%), and SKS Microfinance (4.3%)
Banks (10.1%), finance (9.1%), and textile products (8.3%) are dominating the sector allocation.
Kotak India Mid Cap A USD
The Luxembourg-domiciled fund with $63.4m in assets is third with a 76.3% return.
The fund is managed by Kotak Mahindra (UK) and benchmarks its performance against the CNX Midcap index. The top stock picks are Motherson Sumi Systems (3%), an auto ancillary company, followed by Britannia Industries (2.7%) and Ramco Cement ( 2.4%).
The highest sector holdings are in banking with 17.4% compared to the CNX Midcap benchmark index, which has a weighting of 18.4%, capital goods and engineering (11.4% versus 7.4%) and automobiles (11% compared with 12.3%).
IDFC Premier Equity
Managed by Kenneth Andrade since 2007, the IDFC fund has recorded a 70% return.
Benchmarked against the BSE 500, this fund is a diversified equity fund that seeks to invests across market caps. However, the latest holdings are biased towards small- and mid-cap companies with nearly 59% and 18% weighting respectively. The fund invests in companies that are at an early stage in their economic cycle. It attempts to capture shifts in the business environment and growth in companies.
Kaveri Seed, a consumer non-durables company, is the top pick with a 5.6% weighting in the portfolio followed by engineering services company VA Tech Wabag (5.25%) and Page Industries (5%), a textile product company.
Consumer non-durables (16.2%), finance (9.74%) and transportation (7.1%) are favoured sectors.
Comgest Growth India
The $188.7m Comgest Growth India Fund has a 69.8% return.
The fund is collectively managed by Manish Shah, Wojciech Stanislawski and Vincent Houghton and is benchmarked against the MSCI India Index.
The favoured stock picks are Power Grid Corp of India (5.1%), Max India (4.9%) and Infosys (4.4%).
The top sector bets are industrials (15.8%), consumer discretionary (9.7%) and financials (5.6%).