In this article, we evaluate the performance of HDFC Mid Cap Opportunities Fund. Launched in June 2007, the fund has the largest AUM in the mid cap category at Rs. 31,629 Crores. Kotak Emerging Equity is a distant second at almost half the AUM (Rs. 16,485 Crores).
We will use three metrics to analyse performance consistency with respect to the fund’s benchmark Nifty Midcap 100 Total Returns Index. The data is taken from our monthly equity mutual fund screeners. We shall also use NIfty Next 50 TRI as a secondary benchmark.
1 Rolling return outperformance consistency: the fund returns are compared with category benchmark returns over every possible 3Y,4Y, 5Y period. Higher the outperformance consistency, the better. Suppose 876 fund returns were compared with 876 benchmark returns, and the fund has beaten the benchmark 675 times. The consistency score will be 675/876 ~ 77%.
Three years
| Benchmark | NiftyMidcap100TRI | NiftyNext50TRI |
| No of rolling return entries Index (3 Years) | 1456 | 1456 |
| No of rolling return entries fund (3 years) | 1456 | 1456 |
| No of times fund has outperformed the index (3 years) | 1379 | 1030 |
| rolling return outperformance Consistency Score (3 years) | 95% | 71% |
Four Years
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| Benchmark | NiftyMidcap100TRI | NiftyNext50TRI |
| No of rolling return entries Index (4 Years) | 1211 | 1211 |
| No of rolling return entries fund (4 years) | 1211 | 1211 |
| No of times fund has outperformed the index (4 years) | 1211 | 871 |
| rolling return outperformance Consistency Score (4 years) | 100% | 72% |
Five years
| Benchmark | NiftyMidcap100TRI | NiftyNext50TRI |
| No of rolling return entries Index (5 Years) | 962 | 962 |
| No of rolling return entries fund (5 years) | 962 | 962 |
| No of times fund has outperformed the index (5 years) | 949 | 780 |
| rolling return outperformance Consistency Score (5 years) | 99% | 81% |
HDFC Mid Cap Opportunities Fund had performed quite admirably wrt both benchmarks, although the Nifty Next 50 has been tougher to beat. Please note this is based on past data and does not reflect future performance.
2 Upside performance consistency over every possible 3Y,4Y, 5Y: Higher the better. A score of 70% means, 7 out of 10 times, the fund performed better than the category benchmark when the benchmark was moving up. This is a measure of reward. It is computed from rolling upside capture data (see link below).
| Benchmark | NiftyMidcap100TRI | NiftyNext50TRI |
| upside performance consistency (3 years) | 4% | 71% |
| upside performance consistency (4 years) | 2% | 67% |
| upside performance consistency (5 years) | 0% | 73% |
Curiously, the fund has practically no upside performance compared to its benchmark but tends to outperform Nifty Next 50 when the index moves up.
3 Downside performance consistency over every possible 3Y,4Y, 5Y. Higher, the better. A score of 60% means, 6 out of 10 times, the fund performed better than the category benchmark when the benchmark was moving down. This is a measure of risk protection. It is computed from rolling downside capture data. Read more: An introduction to Downside and Upside Capture Ratios.
| Benchmark | NiftyMidcap100TRI | NiftyNext50TRI |
| downside protection consistency (3 years) | 96% | 74% |
| downside protection consistency (4 years) | 98% | 85% |
| downside protection consistency (5 years) | 100% | 79% |
The fund has good downside protection wrt to both benchmarks.
The trailing returns of the fund are compared with the two benchmarks below.
| Duration | Fund | NiftyMidcap 100 TRI | Nifty Next 50 TRI |
| 1Y | 44.2% | 52.0% | 36.0% |
| 2Y | 31.6% | 34.7% | 23.1% |
| 3Y | 21.1% | 21.0% | 16.4% |
| 4Y | 13.3% | 12.4% | 10.5% |
| 5Y | 16.8% | 16.8% | 15.5% |
Aside from the last 1Y and 2Y performance wrt Nifty Midcap 100, the fund has done reasonably well. Also, see: Nifty Midcap 150 beats Nifty Next 50 for the first time.
In summary, we do not find anything wrong with HDFC Mid Cap Opportunities Fund. The fund has displayed consistent return outperformance and downside protection wrt both Nifty Midcap 100 and Nifty Next 50. There maybe be better funds with trailing return performance in the category, but that happens with any fund at any given time.
It is immature to expect a fund to be on top of its category at all times. Nothing in our analysis suggests that the fund’s AUM has affected its ability to outperform the benchmark at the time of writing.
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