Small and mid cap funds tend to perform much better than the large cap funds because the movement of small cap stocks is much sharper than that of the large caps. When they go down they tend to also fall faster.
Canara Robeco Emerging Equities
This fund has generated a return of almost 75 per cent in the last one year. The returns since launch has been almost 18 per cent. In the last one year the fund has beaten returns from the Sensex and the Nifty. The fund has blue chip stocks like Yes Bank, IndusInd Bank and Wabco.
Going forward the performance of the fund would largely depend on how the banking sector performs, given that the fund has a good deal of exposure to banking stocks. Since the portfolio largely holds blue chip stocks the downside of a risk to the fund may be limited. Crisil has accorded a number one rating to the Canara Robeco Emerging Equities in the small and mid cap category.
Principal Emerging Bluechip Fund
This fund has again given a super set of results in the last one year. The returns of the fund in the last one year has been close to 59 per cent, while the three month return is in the negative territory. The fund has stocks that are very rich in valuations like Eicher Motors, Motherson Sumi and Aurobindo Pharma. Hence any investment in this fund comes with the risk of getting into a fund that has very highly valued shares. Crisil has assigned a top rating to the fund in its category.
Tata Midcap Growth Fund
The performance of the fund in the last year has been superb with one year return of almost 70 per cent. To expect similar returns in the next few years would be foolhardy. Again stocks in the portfolio are stocks that are trading at very high price to earnings multiples. If these stocks fall and come to reasonable valuations, we could see a sharp drop in the net asset value of the fund. Sadhbhav, Wabco and Eicher Motors are some of the stocks where the fund has an exposure.
The one year performance of the funds listed above are excellent. But, there is no guarantee that past performance would result in future performance. We do not see super returns of more than 20 per cent going forward.