Invesco India Midcap Fund is placed at either No.1 or No.2 among all midcap funds for time horizons extending from 6 months to 10 years – an impressive performance indeed.
Over the last 1 yr which has been challenging for midcaps, while the midcap index delivered -4.6%, this fund delivered a strong 12.5% return.
Aditya says their strategy of identifying 7-8 structural themes and populating most of the portfolio from these themes has significantly helped performance as these companies suffered very little earnings downgrades compared to the segment, thus limiting drawdowns during corrections.
Timely exit from richly valued industrials also drove performance.
Aditya is valuations focused and dislikes chasing momentum. He also does not believe in getting boxed into growth or value style of investing. His style agnostic valuations focused approach is helping the fund deliver consistently strong performance.
Two sectors he is bullish on include healthcare and financials. Within healthcare, he is bullish on hospitals and CDMO businesses, while in financials he has picked stocks across several verticals in the lending as well as non-lending spaces.
Midcaps have traditionally been seen as businesses aspiring to become large caps and thus believed to be less stable than large caps – which therefore warrants lower valuations than large caps. Aditya argues that this notion is outdated.
Midcaps today range from Rs. 1 lakh crore to Rs.30,000 crore market cap – which is not really “mid-sized” but simply gets classified that way as the large cap bucket has an artificial limit of top 100 stocks. Many midcaps are sector leaders and are as resilient or more compared to large caps.