Warren Bufett echoed the wisdom of the ‘father of value investing’ Benjamin Graham on the importance of patience when he said “The stock market is a device to transfer money from the impatient to the patient.” The current market situation with visible recovery signs elusive, demands a lot of patience from investors.

In this scenario, investments in schemes which are particularly focused on mid-sized companies would be a rewarding experience once consumption improves in the coming quarters.

To a certain extent, valuations look favourable in case of midsized companies. The Nifty Midcap 100 index is trading at oneyear forward price-to-earnings multiple of 17.1, which is almost on a par with its five-year average of 17.8. This implies that once consumption improves and the benefits of the government’s tax stimulus fructifies, well-placed mid-sized companies may see earnings upgrades in the coming quarters.

Among mid-cap schemes, investors can consider investing in Kotak Emerging Equity Scheme. One of the key aspects of the scheme is the quality of its portfolio, which includes companies that have high corporate governance standards, lean cost structure and better balance sheets than their peers in their respective sectors. Keeping these factors in mind, the scheme’s fund manager Pankaj Tibrewal has demonstrated encouraging performance both in the long-term and short-term. In the past five-year and ten-year periods, the scheme has given returns of 13% and 14.1%, respectively, while its peers in the same category have given average returns of 10% and 13.6% respectively.

Portfolio change (Past 6 months)

New Entrants Complete Exits Increase in Allocation
Cadila Healthcare Eveready Industries (India) SBI, Max Financial
HPCL, Axis Bank Bharat Financial Inclusion Sheela Foam
Indusind Bank D-Link (India) Alkem Laboratories
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Returns (In %)

Period CAGR Return SIP CAGR Return Midcap-AVG Annualised Return (%)
1 Year 9.07 5.11 3.50
3 Year 5.55 2.07 4.45
5 Year 12.91 7.65 9.76

Returns peer comparison (In %)

Scheme Name 1-Year 3-Year 5-Year
Kotak Emerging Equity Scheme 9.10 5.55 12.91
Axis Midcap Fund 17.27 12.21 12.47
DSP Midcap Fund 11.50 6.25 12.99

Source: Accord Fintech, Complied by ETIG Database

Expert Take

Kaustubh Belapurkar,Director Fund Research, Morningstar India

Pankaj Tibrewal runs the fund with a focus on containing downside risk. The fund’s portfolio has been positioned to gain advantage of leverage and growth in the domestic economy with its positions in basic materials, financials and consumer cyclical stocks. The fund is an excellent option for investors looking invest in the mid-cap space.



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