Reliance Growth Fund Tops The Midcap Category

The BSE-Midcap posted returns of 69.60% in the month of July 2007 (as on 20 July 2007). Out of 25 open-ended growth Midcap equity funds less than 50% funds outperformed the benchmark index. The average returns at 64.15%, posted by the funds were less the returns posted by BSE-Midcap.
Junior BeEs topped the Midcap category, posting 86.36% one-year returns as on 20 July 2007. The scheme was incepted in March 2003 and has a corpus of mere Rs 4.57 crore as on 30 June 2007. It was followed by Magnum Midcap Fund, which posted 79.87% one-year returns.

However Birla Midcap Fund and Reliance Growth Fund are gaining investor confidence as they have a low risk and high return profile. The schemes posted 79.70% and 78.11% one-year returns respectively. Reliance Growth Fund has the highest corpus of Rs 3923.90 crore as on 30 June 2007.

The chart give you a snapshot of how the mid cap mutual schemes have performed on the risk return parameters in the past. We have used the bubble analysis method to measure their performances on three parameters as risk, return and fund corpus.

The risk is measured by standard deviation, which measures the average deviation of the returns generated by a scheme from its mean returns. We have tried to explain the same with the help of a diagram, which is divided into four quadrants, with each quadrant containing schemes of a particular risk-return profile. The size of the bubble indicates the size of the fund. The schemes in the high-risk high returns quadrant follow a very aggressive approach and deliver high absolute returns compared to the peers albeit at a higher risk.

The schemes in the low-risk high returns quadrant outperform the peer group on the risk-adjusted returns basis as they deliver higher returns compared to the peers without exposing the portfolio to very high risk. The schemes in the low-risk low returns quadrant are not very aggressive and provide lower absolute returns, taking lower risks.

The schemes in the high-risk low returns quadrant underperform the peers on the risk adjusted returns basis as they adopt a high-risk strategy but the returns fail to compensate the risk taken by the fund.