Funds fail to keep pace as mid-cap stocks rally to record

Fund managers were overweight on shares of consumer and drug makers

Fund managers in India have failed to keep pace with the rally in the country's medium-sized stocks. An index of Indian mid-cap mutual funds returned 8.1 per cent in the past six months through February 3, trailing the benchmark Nifty Midcap 50 Index's 12.4 per cent gain in the same period, according to data compiled by Bloomberg.

The underperformance was due to money managers being slow to switch out of consumer and pharmaceutical stocks and into the hottest sectors, said Prashasta Seth, chief investment officer at IIFL Asset Management Co. "Funds got burnt as they ended up in a