Small, mid-cap mutual funds outperform in Q2: Crisil

Small and mid-cap equity mutual funds outperformed other equity funds for the second consecutive quarter ended September 2011 as per the Crisil Research. According the agency's mutual fund rankings, the same trend was observed in the previous quarter as well.

Global issues coupled with domestic worries like high inflation and rising interest rates took a toll on the performance of indices this year. The S&P CNX Nifty and S&P CNX 500 indices delivered negative returns of 12.47% and 12.04%, respectively, in the quarter under review.

They posted the lowest quarterly returns over the last eight quarters. However, mutual funds performed better with large cap, diversified and small and mid cap equity funds outperforming both the indices.

The rankings said that small and mid cap funds fared relatively better with a negative 6.83% return as compared to negative 10.48% by large cap funds and negative 10.01% by diversified funds in the quarter ended September 2011.

A key reason for equity funds outperforming the benchmark indices has been the decrease in equity exposure.“Given the current uncertain environment, the average equity holding of equity funds has gone down from 95% as on September 30, 2010 to almost 93% as on September 30, 2011.

Crisil Fund Rank 1 equity funds have been more proactive and have reduced their equity exposure from 96% to 92% during the same period,” said Jiju Vidyadharan, Head – Funds & Fixed Income Research of Crisil.