tag:blogger.com,1999:blog-2468506476739785772.post3590072178644854120..comments2023-08-15T17:52:38.649+05:30Comments on Mera Bharat Kahan-- Bala's Blog: Mutual Funds - All weather harbourFrustrations Amalgamatedhttp://www.blogger.com/profile/11867735513936757228noreply@blogger.comBlogger2125tag:blogger.com,1999:blog-2468506476739785772.post-77640759864144781092010-10-19T21:32:20.408+05:302010-10-19T21:32:20.408+05:30@ ArthaNITI- Thanks for raising an interesting poi...@ ArthaNITI- Thanks for raising an interesting point. <br />Mid cap space is very treacherous. In many cases, it is the fund manager who makes and breaks these stocks. One fellow starts accumulating quietly. Then the ‘idea’ is sold to a fund manager. He now starts buying. In the first case, the stocks come from the promoter. In the second case, it comes from the promoter and the first ‘discoverer’. Once there is a run up in prices, both dump. Liquidity vanishes. Unless there is control on the supply of stocks, prices generally trend one way. The other issue, as you rightly point out, is of quality. Out of ten stocks, one may turn in to an average stock. The rest simply vanish or languish. Hence, the mid stock universe does not deliver better returns in aggregate. A single stock or two may become multi baggers. The fund houses rarely have multi baggers, because of market capitalisation reasons. When a co market cap is 20 cr, the max a fund can buy is a crore worth! And he may have a rule that he will not buy stocks with market cap less than 200 or 300 cr. In which case, the price has to multiply ten to fifteen times before he can buy! Hence mid caps are good for individuals and not so great for mutual funds. Hope this explanation makes some sense.<br />Regards<br />BalaFrustrations Amalgamatedhttps://www.blogger.com/profile/11867735513936757228noreply@blogger.comtag:blogger.com,1999:blog-2468506476739785772.post-64474025032944149842010-10-19T20:45:15.564+05:302010-10-19T20:45:15.564+05:30Sir, the fact that small & mid-cap fund return...Sir, the fact that small & mid-cap fund returns are similar to that of large-cap funds is a pointer to what? Fund manager's tendency to churn portfolios (and hence not stick to their bets long enough?) or the general lack of good quality managements with long-term vision in the mid-cap space? or any other reason - your views please!ArthaNITIhttps://www.blogger.com/profile/03600944921598854561noreply@blogger.com