Which are the best performing midcap, smallcap PMS strategies?

We take a look at the winners in different time periods like 6-month, 1-year, 3-year and 5-year to find out the best performing portfolio management service funds

Kumar Shankar Roy Feb 12, 2020

portfolio management serviceIn the past few months, the buy call on midcaps and smallcap has been increasingly getting louder. Many investment managers, including those employed by mutual funds, have minced no words when it comes to talking about how midcaps and smallcaps are attractively valued and are at the cusp of a major turnaround in sentiment. One may argue that fund managers say such things only when mutual funds have launched midcap and smallcap products. But, the buy calls on midcap and smallcaps seem rational especially in the backdrop of a narrow rally in largecaps for quite sometime. In fact, midcaps and smallcaps seem to have woken up in the past few weeks and are showing early signs of that elusive turnaround. Many readers interested in PMS (Portflio Management Service) ask what are the best performing strategies. The answer depends on the time period you are looking at. RupeeIQ digs deep. Read on.

3-month winners

Three months is a short time period, but some midcap and smallcap PMS strategies stand out. Do remember this data is as on December 31, 2019 and does not capture the action in midcap and smallcap stock space in January and first two weeks of February.

Equirus Long Horizon is atop charts in 3-month period with a 13.06% return. The fund is managed by Viraj Mehta. The fund was launched in October 2016, thereby having a short track-record. A distant second is Edelweiss Focused Smallcap with 8.3%, followed by Asit C Mehta Ace Midcap with 7.6% gain, Stallion Asset Core with 6.99% return, ABANS Smart Beta with 6.98% gain and Motilal Oswal Opportunities (IOP) Series 2 with 6.88% return.

In comparison with the top-performing midcap and smallcap PMS strategies, the top midcap and smallcap mutual funds have clocked between 6% and 7% return in the same three-month time period. Mirae Asset Midcap is the frontrunner with 7.17%, followed by Motilal Oswal Midcap 100 ETF (6.76%), Nippon India ETF Nifty Midcap 150 (6.72%), and PGIM India Midcap Opp. (6.65%).

Also Read: What makes Marcellus PMS’ Little Champs smallcap strategy worth a look for long term investors

6-month winners

In the six-month time horizon, Equirus Long Horizon is displaced by Stallion Asset Core with a maximum of 14.4% return. Stallion Asset Core Fund, managed by Amit Jeswani, is Stallion Asset’s flagship PMS fund. It prefers financials, consumer, pharma & technology companies. Equirus Long Horizon comes to 2nd rank with 10.03% gain, followed by Centrum Deep Value (8.9%), Centrum Multibagger (7.2%), ABANS Smart Beta (5.05%) and Ambit Emerging Giants (5%), which is a portfolio that aims to invest in smallcap companies.

In comparison with the top-performing PMS strategies, the top midcap and smallcap mutual funds have clocked between 4-9% return in the same 6-month time period. Axis Small Cap is the frontrunner with 9.59%, followed by Axis Midcap (7.59%), Motilal Oswal Midcap 30 (6.75%), DSP Midcap (4.67%) and Union Small Cap (4.55%).

12-month winners

Given that the 3-month and 6-month top performers are mostly the same, it does not surprise anybody to see the same names feature in the 12-month list. Stallion Asset Core PMS strategy is the best with a whopping 26.46% rise, followed by Ambit Good and Clean with 14.5%, Centrum Deep Value with 11.93%, Centrum Multibagger with 10.5% and Equirus Long Horizon with 8.6%. Notice how the Centrum PMS strategies, which have constantly figured in the above time periods as well. Ambit Good and Clean PMS focusses on midcaps.

In comparison with the top-performing PMS strategies, the top midcap and smallcap mutual funds have clocked between 10-19% returns in the same 12-month time period. Axis Small Cap is the best with 19.38% gain, followed by Axis Midcap (11.33%), ICICI Prudential Small Cap (10.03%), and Motilal Oswal Midcap 30 (9.72%).

Also Read: ‘Today we like smallcaps much more than others’: Sankaran Naren, CIO, ICICI Pru AMC

2-year winners

The downfall in midcap and smallcap stocks started in January 2018. So, the 2-year period does not contain any great returns because it mostly captures the effect of drawdowns during December 2017 to December 2019 period. Naturally, the best performers in this time period have meagre returns. For instance, Ambit Good and Clean is the best with just 8.4% CAGR, followed by Ambit Emerging Giants with 3.9% and Tata Capital Emerging Opportunities with 1.3%. Many of the PMS strategies actually sport a negative return in the 2-year period.

Like the top performing PMS strategies, the top midcap and smallcap mutual funds in the 2-year period are few. Axis Midcap is at the top fund with 7.51% gain, followed by Axis Small Cap with 4.46%, but there is no other MF scheme with a positive return.

3-year winners

In the 3-year time period, it becomes clear that only a few midcap and smallcap PMS strategies can hold it together. While some strategies have recently started delivering gains, a handful of PMS funds have maintained their lead even in the 3-year window.

Equirus Long Horizon leads from the front with 15.36% CAGR, followed by Ambit Good and Clean (14.9%), Tata Capital Emerging Opportunities (13.6%), Tamohara TLES (12.1%), and Centrum Deep Value (12.08%). Let us take a quick look at the new names that figure in the top winners’ list. Tata Capital PMS runs quite a few strategies, with the Emerging Opportunities being the one that predominantly looks at midcaps. Tamohara Long Term Equity Strategy (TLES) is a predominantly smallcap and midcap strategy, with an up to 20% tactical allocation to largecap in unusual circumstances.

In comparison with the top-performing PMS strategies, the top midcap and smallcap mutual funds have clocked between 11-17% returns in the same 3-year time period. Axis Midcap is the best with 17.56% gain, followed by SBI Small Cap (14.81%), Invesco India Midcap (12.22%), and Nippon India Growth (11.53%).

Also Read: ETFs in a Box: A basket of ETFs from NJ Advisory Services as a PMS product

5-year winners

Five years is a long period, though it is statistically a single data point. By now, you must have got a fair idea about the winning strategies across both short and medium-term periods.

The top midcap and smallcap PMS performers are Invesco India Caterpillar 9.3%, Sundaram S.E.L.F 9.26%, Centrum Multibagger 7.6%, Motilal Oswal Opportunities (IOP) Series 2 with 7.32%, Kotak Small & Midcap 6.4% and AccuraCap PicoPower 6.09%.

In comparison with the top-performing PMS strategies, the top midcap and smallcap mutual funds have clocked between 10-13% returns in the same 5-year time period. These are much better than the PMS winners. SBI Small Cap is the best with 13.21% gain, followed by Axis Small Cap (11.39%), Kotak Emerging Eq. (10.45%), DSP Midcap (10.39%) and L&T Emerging Businesses (10.31%).

The minimum investment in a PMS strategy is Rs 50 lakh. You can read RupeeIQ PMS coverage here.


Kumar Shankar Roy

Kumar Shankar Roy is contributing editor with RupeeIQ. Kumar is a financial journalist, with a functional experience of 15 years. He tracks mutual funds, insurance, pension, PMS, fixed income/debt and alternative investments markets closely. He has worked for The Times of India, The Hindu Business Line, Deccan Chronicle Group, DNA, and Value Research, among others, across different cities in India. He is deeply interested in marrying data insights with actionable opinion. He can be contacted at kumarsroy@rupeeiq.com.

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