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BNP Paribas Mid Cap Fund: Strong & steady performer
Wed, Jun 24, 2015
Source : Khyati Shah, Citrus Interactive

BNP Paribas Mid Cap Fund :  Strong & steady performer

BNP Paribas Mid Cap Fund is an open ended diversified equity fund that invests primarily in mid and small cap companies with high growth opportunities which can be defined as ‘Future Leaders’. The objective of the fund is to create long term capital appreciation and the fund is inclined towards investments in companies that are driven by dynamic style of management and entrepreneurial flair. The fund was launched in May 2006 and is benchmarked against the CNX Midcap index. The fund has an AUM of Rs.316 cr as on May 31, 2015.


Performance:

BNP Paribas Mid Cap Fund has consistently beaten the CNX Midcap Index and the equity diversified category average across all time frames in the last 5 years. The fund has consistently been the top two quartiles in terms of performance as against other funds in the equity diversified space. Since its inception the fund has underperformed the CNX Midcap index signifying under performance in its initial years.

Scheme Name

YTD

1-Year

3-Years

5-Years

Since Inception

BNP Paribas Mid Cap Fund

9.33

44.66

36.71

22.66

144.24

CNX Midcap

4.74

29.97

24.14

11.2

151.36

Category Average

4.36

32.55

27.3

15

NA

Rank

9/158

26/153

17/145

7/132

NA

Figures are in % as on May 31, 2015;


The fund has consistently outperformed the equity diversified category average on an annual basis over the last five years. This is quite commendable given its focus on mid caps which have been quite volatile over the same period. The fund has consistently outperformed the CNX Midcap index over the last five years.

Scheme Name

2010

2011

2012

2013

2014

BNP Paribas Mid Cap Fund

8.7

0.07

22.03

44.48

44.66

CNX Midcap

3.98

-14.46

13.39

29.65

29.97

Category Average

7.97

-9.28

17.81

33.04

32.55

Rank

66/132

3/140

36/145

24/149

26/153

Figures are in % as on May 31, 2015;


Portfolio Characteristics:

Sector Concentration:  The fund concentration in the Top 3, Top 5 and Top 10 sectors is lower than the category median.

Scheme Name

Top 3

Top 5

Top 10

BNP Paribas Mid Cap Fund

27.78

36.69

55.94

Category Median

35.28

46.86

68.84


Company Concentration:  The company concentration of the fund in the Top 3, Top 5 and Top 10 companies is lower than the category median highlighting lesser risk of the fund.

Scheme Name

Top 3

Top 5

Top 10

BNP Paribas Mid Cap Fund

15.41

21.61

35.36

Category Median

17.36

26.27

43.07


Number of equity holdings:  As of May 31, 2015, the fund holds 53 stocks which are slightly higher than the category median of 49 stocks in the diversified equity segment. 


The top 5 sectors in the portfolio had an allocation of 36.69% which is lower than the category average of 48.23%. The fund’s exposure to cyclical stocks currently is 35.73% followed by services with 17.75% & defensives with 15.10%. The fund has a cash and cash equivalent of 4.23%.  The Top five holding are Idea Cellular Ltd., Bharti Airtel Ltd., Welspun India Ltd., IndusInd Bank Ltd., Ramkrishna Forgings Ltd.

The Fund House defines ‘mid-cap’ as a stock whose market capitalization shall not exceed the market capitalization of the 50th stock (after sorting the securities in the descending order of market capitalization) listed with The National Stock Exchange of India Limited. This allows the fund to have a scattered presence of stocks with fairly large market capitalisation.

 

Risk Measures: 

The risk measure for the fund both in terms of Standard Deviation & Beta (average of the last three years) is lower than the category median.   

Scheme Name

Standard Deviation

Beta

BNP Paribas Mid Cap Fund

0.83

0.66

Category Median

0.9

0.86

 

Risk adjusted Returns:  The risk adjusted return for the fund in terms of Sharpe and Treynor ratios (measured as average of last three years), is superior to the category median.

Scheme Name

Sharpe

Treynor

BNP Paribas Mid Cap Fund

0.14

0.18

Category Median

0.09

0.1

 

Process: 

BNP Paribas Mid Cap Fund primarily focuses on mid & small cap companies which exhibit dynamic style of management and entrepreneurial flair (defined as future leaders) targeting aggressive investor with an investment time horizon of more than 18 months. The fund is expected to allocate a minimum of 65% of its portfolio in equity & equity related instruments of companies categorized as future leaders & maximum of 35% in equity & equity related instruments of other companies. The fund may also invest upto 35% of its portfolio in Debt & Money Market instruments.

In normal circumstances, the Fund will stay invested 95% of investible resources in equities, Equity- related instruments and / or derivatives. It will hold a minimum of 25 stocks at any point of time.

The fund’s expense ratio of 2.41% is lower than the category average of 2.42%. Like most equity funds the fund has an exit load of 1 per cent on or before one year from the date of investment. Minimum investment in the fund is Rs 5,000.

 

Fund Manager:

Mr. Shreyash Devalkar has an experience of more than 8 years in equity markets starting off as a research analyst with IDFC Capital Ltd & IDFC Asset Management thereafter. He joined BNP Paribas AMC as a Research Analyst in January 2011, becoming a Fund Manager in October 2011. His earlier stints include about two years of experience in Credit Analysis with JP Morgan Services India and Calyon Bank. He is an engineer from UDCT, Mumbai with a post graduate degree in management from the JBIMS, Mumbai University. Currently he manages the BNP Paribas Equity Fund, BNP Paribas Dividend Yeild Fund & BNP Paribas Tax Advantage Fund in addition to the BNP Paribas Midcap Fund.

 

View: 

BNP Paribas Mid Cap Fund has a very good track record consistently beating the equity diversified category average mostly being in the top two quartiles in the last 5 years which is quite commendable given its orientation towards mid & small cap companies. The fund has also outperformed the CNX Mid cap index in the last 5 years. The fund has a fairly diversified portfolio of small & mid cap stocks & the size of the fund at Rs 316 crores is also moderate for midcap oriented fund which give enough flexibility to the fund manager to generate outperformance by better stock selection.

Going by past trends we expect the fund to continue outperforming the equity diversified category & CNX Midcap index. Investors who have mid cap orientation but want to balance it with a lower level of risk will find this fund to be a good option. Last year many of the mid cap funds have topped the charts with performances ranging from 50-70% against a BSE Sensex performance of 15% and the CNX Midcap Index performance of 30% (12 month performance as on 31st May 2015). However, the size of quite a few of these funds has ballooned to a level where it will be difficult to sustain their performance with a mid cap profile of the portfolio. In that respect too, a modest size of the BNP Paribas gives it the right nimble footed agility to remain true to its character of a primarily a mid cap fund.

 
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