MUMBAI: Midcap funds which were earlier scorching the performance charts and generating high alpha, or outperforming benchmarks, have now started to slip up visibly. Data from Morningstar shows that 47% of the mid-cap funds have been underperforming their respective benchmark indices over the past one year. While 80% of the mid-cap funds have outperformed the BSE Midcap index over the past three years, the underperformers over the past year now constitute 60% of the entire basket.Experts contend this is a typical phenomenon during later phases of a market rally. Kaustubh Belapurkar , director-fund research, Morningstar Investment Adviser India, explains: "Several mid-cap funds have become cautious after the recent run-up in prices and allocated more towards nascent large caps. Managing the surging inflows has also proved to be a challenge, with some funds even suspending fresh lump sum investments for the time being.

Source: Economic Times November 14, 2016 02:54 UTC