Style and size drift in Indian small and midcap equity mutual funds

Abstract

This report analyses the “style” and “size” drift in Indian Equity Mutual Funds focused on the Small & Midcap stocks. We have devised a holdings based ranking technique in order to quantify the dispersion within the fund and with respect to the benchmark. Our findings suggest that higher dispersion does not guarantee higher excess returns and in case the fund manager deviates from the investment style, his/her stock picking ability determines the fund’s excess returns.