DSP Midcap Fund: Fund review

In the past three-year and five-year periods the scheme has given 12% and 17% returns, respectively.

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One of the efficient ways of making money is investing in mid-sized companies at a time when markets are rising. In falling markets, savvy investors stay clear of mid-sized companies. But during elections, especially in the case of strong mandate, the likelihood of mid-sized companies performing well is quite high. Given that exit polls are suggesting a strong mandate in favour of the BJP-led coalition, analysts believe that in the next three years, interest in mid-sized companies may rise.

For investors, who are not averse to a high risk-high return portfolio, investments in mid-cap schemes with a time-frame of minimum five years should serve well to add incremental returns to their portfolio. It has been observed in the past that during a downcycle, investments in mid-cap schemes serve well as well-placed mid-sized companies tend to do well once demand improves and earnings catch up.

One such mid-cap scheme which has consistently beaten its peers over five-year and 10-year time frames is DSP Midcap Fund. The scheme has delivered merely on the strength of investing in quality mid-caps that have relatively superior balance sheets, and cost management and consistent and stable growth in revenues. In the past three-year and five-year periods the scheme has given 12% and 17% returns, respectively, while its benchmark S&P Midcap TRI has given 9% and 14% returns in the same period.


In the past six months, the fund managers Vinit Sambre and Resham Jain have bought in mid-sized companies from diverse sectors which hold the promise of stable earnings. These are Balkrishna Industries, Bata, Sheela Foam and SBI Life Insurance.

Portfolio Change (Past six months)
New Entrants Complete Exists Increase in Allocation
ACC Care Ratings Motherson Sumi Systems
Balakrishna Inds Cadila Healthcare Mindtree
Bata India Engineers India Amara Raja Batteries

Returns (in %)
Period CAGR Return SIP CAGR Return Marketcap Midcap-Avg CAGR (%)
1 year -7.09 -3.59 -9.41
3 year 12.51 3.20 9.37
5year 16.17 9.49 14.45

Returns peer comparison (in %)
Scheme 1-year 3-year 5-year
HDFC Midcap Opportunities Fund -10.o6 11.30 16.11
Invesco India Midcap fund -5.05 10.76 15.73
Kotak Emerging Equity Scheme Regular -8.44 10.67 19.10
Source: Accord Fintech, Complied by ETIG database

Expert Take
Kaustubh Belapurkar, director-fund research, Morningstar India

Vinit Sambre is among the best small- and mid-cap managers in the country. The fund’s exposure to small and mid stocks is among the highest in the category, but Vinit has also used large-cap exposure to good effect. He also invests a portion of the portfolio in companies trading well below their book values, which constitute his value picks.
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