HDFC Mid-Cap Opportunities Fund, the biggest mid-cap scheme with assets of more than Rs 19,000 crore, has a little less than 35 per cent of its assets invested in mid-cap stocks as defined by the Securities and Exchange Board of India’s (Sebi’s) new categorisation norms.
The scheme will have to buy mid-cap stocks worth up to Rs 5,830 crore, and simultaneously slice its holding in large- and small-cap stocks, to comply with the new norms, analysis of Value Research data shows. Other mid-cap schemes that may have to substantially rejig their portfolio include Reliance Growth Fund, IDFC Premier Equity, L&T India Value and Reliance Mid & Small Cap, assuming that these schemes are retained as mid-cap schemes.
In fact, more than half of the 48 mid-cap schemes in the market have less than 35 per cent of their assets invested in mid-cap stocks. The 48 schemes manage assets worth more than Rs 1.07 lakh crore, and a portfolio rejig could lead to a purchase of mid-cap stocks worth Rs 29,000 crore. Of this, nearly Rs 19,250 crore worth of buying might be needed by 10 of the larger mid-cap-oriented schemes (see table).
A mid-cap fund is now required to invest at least 65 per cent of its assets in mid-cap stocks — those that are ranked between 101 and 250 by way of full market capitalisation.