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LIC Nomura MF Mid Cap Fund

 

LIC Nomura MF Mid Cap Fund Invest Online

It will invest in medium–sized companies and its benchmark index is the CNX Midcap

 Hemant Mishra/Mint
 

The season of new fund offers continues and perhaps now is the turn for those fund houses that have so far stayed away. LIC Nomura Mutual Fund Asset Management Co. Ltd has launched its latest offering called LIC Nomura MF Mid Cap Fund. It will invest in medium–sized companies and its benchmark index is the CNX Midcap. It will invest in shares of those companies that either lie in the CNX Midcap index or in companies whose market capitalization is between that of the largest and smallest company in the CNX Midcap index. It is an open-ended fund and is structured like any plain-vanilla mid-cap scheme. The fund managers told us that, among other things, they would look at the underlying company's liquidity in the stock market. Expect the fund to be diversified more than usual; the fund managers said for a mid-cap fund strategy, they aren't comfortable with a tightly-held portfolio.

WHAT WORKS...

As India's economy shows signs of picking up, there's a revival in the investment cycle. Companies are looking forward to using their capacities more, which would result in better output and, therefore, better earnings. In an improving economy, mid-caps tend to outperform large-caps since the positive sentiment tends to trickle down to small- and mid-sized companies as well. And in rising markets, investors' appetite for small companies also goes up as their risk–taking ability goes up simultaneously. In 2014, S&P BSE Midcap index rose by 55%, as against rising just 5.73% a year prior. In fact, mid-caps outperformed large-caps as S&P BSE Sensex rose 30% in 2014.

...WHAT DOESN'T

Mid-caps are risky and they can fall as swiftly as they rise. A fund manager's ability in spotting the right companies at the right prices is very important. LIC Nomura MF's track record, though not inspiring, has certainly improved. Performances of two of its flagship schemes, LIC Nomura MF–Equity and LIC Nomura MF–Growth, have turned around. In 2014, the first scheme was in the top two quintiles with returns of 42%, while the second one very nearly made it there with returns of 40%. However, there are scores of fund houses that have a far better track record. Besides, LIC Nomura MF Mid Cap Fund is a new scheme and, therefore, has no track record.

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