Midcap Funds Underperformed in 2017 because of Vakrangee Limited ?

 

“Mid cap category was the worst hit, with 62 per cent schemes underperforming. We had a total of 34 mid cap schemes in our list.”

From this Nov 2017 article.
//economictimes.indiatimes.com/articleshow/61736777.cms?utm_source=contentofinterest&utm_medium=text&utm_campaign=cppst

A lot of Midcap Mutual Funds underperformed the Benchmark – Nifty Midcap 100 in 2017.

One of the reasons was the huge move in Vakrangee Limited and a little bit of a outperformance move in Rajesh Exports. Both these companies have almost zero Mutual Fund Holdings . ( good to see such a boycott.)

But the index calculation does not care for valuations or any other governance concerns. Its a free float survivorship index. For example RCOM was the 7th Largest weight in Nifty in 2007 peak.

Stock Value – Dec 2016 Weights – Dec 2016 Value – Dec 2017 Weights – Dec 2017 Value – Feb 2018 Weights – Feb 2018 Returns Dec16 to Dec17
Rajesh Exports 462 1.18% 805 1.47% 837 1.52% 74.24%
Vakrangee 137 1.58% 421 3.47% 163 1.34% 207.30%
Nifty Midcap 100 4402   6697   6199   52.14%

Of the 52% return in 2017 almost at 3-4% impact came from Vakrangee !!!

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