Invesco India Mid Cap Fund - Direct Plan (Growth)
Reason for recommendation
Contrary to the common belief, mid-cap dedicated mutual fund schemes have outperformed the benchmark in the last one year by a huge margin, albeit they both have given negative return on an average. The mid-cap category comprising of around 23 funds have given a negative return of 9.85 per cent in the last one year compared to a negative return of 15.48 per cent generated by its benchmark during the same time frame.
Invesco India Mid Cap Fund is one fund that has outperformed its peers and not to mention its benchmark as well. The fund’s outperformance is because it remained true to its name and invested 85.82 per cent in mid-cap companies compared to 79.24 per cent by category. Moreover, the fund has lower exposure to the small-cap companies compared to its peers, which further helped its performance as small-cap companies saw a larger fall than mid-cap companies. Besides, the fund is well-diversified with 43 stocks at the end of January 2019 and not a single company has a weightage of more than 4.57 per cent.
Going ahead, what will help the fund to outperform is its defensive positioning. Compared to its category (17.5 per cent), the fund has given more weightage to defensive sectors that forms around 30 per cent of its total AUM. This being an election year, the market is likely to remain volatile and hence defensives are likely to perform better than cyclicals. Presence of companies such as United Breweries, Aditya Birla Fashion, Torrent Pharmaceuticals encompassing consumption and healthcare is likely to help the fund do better going ahead.