The benchmark of DSPBR Equity Fund is S&P CNX Nifty. Then why has it been classified as a mid-cap fund on Value Research?
- Vinayak Nadgauda
An equity fund chooses its benchmark which it believes will most closely resemble its investment style and returns. It helps investors compare the scheme's performance with that of the benchmark index and justify the additional risk taken.
At Value Research, we classify funds into various capitalisation ranges based on their portfolio, which in turn decides its market cap. The largest 10 per cent funds by their market cap are classified as large-cap, next 20 per cent as mid-cap and the remaining 70 per cent as small-cap.
So while a fund invests in all large-cap companies, its relative market cap in its peer group will determine how it will be classified.
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