MID-CAP Shares?

Cap is short for capitalisation which is a measure by which we can classify a company's size. Big/large caps are companies which have a market cap between 10-200 billion dollars. Mid caps range from 2 billion to 10 billion dollars.

this article will give some ideas
IS the mid-cap story just beginning to shape up or are we in the thick of it already? The question has lately assumed top-of-the-mind status and both investors and fund managers are trying to find the answer. The right answer, however, is simply not there, the many attempts to find it notwithstanding.

There are swarms of people who swear by the mid-cap theory, though. A section of the ntry's fund houses is currently busy offering various explanations in its support. The latest to do so is Birla Mutual Fund, which has just moved the Securities and Exchange Board of India with an offer document.

Investors, however, need to remember a few things before they get swayed by the noise. To cut a long story short, mid-cap shares can be more capricious than the large-cap ones. NAVs of the so-called mid-cap funds may, therefore, be more unstable than the rest.

Will a dedicated mid-cap fund provide more returns than a general growth fund that is not similarly oriented? While a number of factors could well influence the issue, the point is that the market should exercise extreme caution before it checks out what looks like a decent mid-cap proposition.

Some purists naturally point out that the normal growth fund has no real alternative. Others urge you to forget `value' or `growth', and just stick to a loose mix-and-match strategy that will generate capital appreciation over a period of time.

Moving over to another subject, let's tune in to a recent contribution by Morningstar. According to this fund tracking agency in the US, noted fund houses have a certain number of common traits, some of the important ones being low costs, diversification and savvy management. While all three are very important for investors everywhere, the Indian investor may be particularly interested in the cost factor.

"Over time the amount of money you can save in operating expenses can have a major impact on your bottomline," says Morningstar even as it refers to leading fund house Vanguard. The latter, it points out, has "rock-bottom expenses" as it is "owned by the fund's shareholders... That means Vanguard essentially provides its services at cost".

It also talks about another biggie, American Funds. This one is said to be keeping its operating expenses below industry norms. "Economies of scale are a big help in keeping costs down, but the shop also saves money by not advertising its funds," Morningstar has noted.

As for new launches, Pru ICICI MF has mooted an aggressive equity fund, while Sundaram MF is expected to come out with a debt plan suited to wholesale investors.