Mid and small-cap mutual fund schemes have delivered negative 6 percent returns in the one week period ended May 25, under-performing the large-cap funds category.
Mid-cap funds delivered negative return of 5.41 percent, while small-cap funds gave 5.85 percent return in the week ended May 25. In the same period, large cap funds category delivered negative return of merely 2.35 percent.
In one month to May 25, too, the mid-cap category gave negative returns of 3.2 percent, while small-caps delivered negative 3.4 percent return, while large cap category gave 23 percent returns.
In comparison, BSE Sensex rose 2.69 percent, BSE Midcap and BSE Small Cap index fell 4 percent and 3.3 percent, respectively.
The sharp run-up in mid-cap stocks has made them relatively costlier as compared to the broad index. Based on valuations the BSE MidCap index is trading at a historic price-to-earnings (PE) of 37.69 times, which is higher than that of Sensex that trades at 21.76 times.
There are several reasons for this disparity. Stocks comprising the midcap space are generally domestic plays, while stocks in the large-cap basket are global players with exports accounting for a significant portion of their sales. With a global slowdown investors piled on midcap stocks where probability of growth was higher.
With the risks increasing in this space, experts are advising investors to take a break from their mid-cap addiction.