January 5, 2026
admin
As the JM Midcap Fund completes its three-year journey, investors are evaluating how the scheme has navigated a highly volatile midcap landscape. With a NAV of Rs. 19.93, the fund has delivered an impressive 24.93% three-year return, outperforming the BSE 150 MidCap TRI’s 21.60% despite short-term underperformance in the past year. The current portfolio shows a strong tilt towards midcaps (52.25%) with selective exposure to large caps (35.54%) and small caps (12.22%), along with differentiated overweight positions in Healthcare and Consumer Discretionary. We speak with Mr. Mayukh Datta, Chief Business Officer, JM Financial Mutual Fund, to understand the fund’s philosophy, sector choices, risk controls and the road ahead.
-By Jainee Shah, Director, Chanakya Mediahouse Pvt. Ltd., SEBI Registered Research Analyst, Chartered Accountant
1) Balancing strong 3-year alpha with recent underperformance
Over 3 years, JM Midcap Fund delivered around 24.93% annualized return versus 21.60% for the BSE 150 Mid Cap TRI, but the last 1 year and YTD numbers trail the benchmark. How do you explain this short-term performance phase to investors, and what part of the portfolio is primarily responsible for the recent drag?
JM Midcap Fund recently completed 3 years, during which the Scheme’s NAV has nearly doubled. Rs. 10000 invested in the Scheme at inception in the regular plan of the Scheme has become 19590 as on November 20, 2025 (date of completion of 3 years) Source: ACE MF. During the last 1 year, there has been a time correction in the market, which is evident across market cap segments, including midcaps. The Scheme has also been impacted by the same. However, the Scheme maintains its growth orientation and the style of management, and we are hopeful that the ongoing reversal in earnings in midcaps will benefit the Scheme.
2) Mid cap–small cap tilt and market-cap calibration
The fund has over 52% in midcaps and more than 12% in small caps, with an average market cap lower than the category. What internal framework do you use to decide how much risk to take in the small cap bucket, and at what point would you consider dialling down small cap exposure if volatility or liquidity risks rise?
As on November 30, 2025, we have 68% exposure to Midcaps and 25.90% exposure to small caps, in accordance with the growth philosophy of the fund house. The small cap allocation is not tactical. We invest in stocks where we envisage a structural growth story. The fund management team endeavors to maintain the quality of the portfolio. We are nimble in our approach and do not allow for significant portfolio drift.
The above investment approach is subject to evolving market conditions and may change on the discretion of the fund manager with or without any prior notice. For complete details of the investment approach, please refer to the Scheme Information Document (SID) of the Scheme.
3) Sector positioning: overweights and underweights vs category
You are notably overweight Consumer Discretionary and Healthcare versus the category, and relatively underweight Technology and Energy & Utilities. What is the core thesis behind these sector calls, and how much of your 3-year alpha can be attributed to sector allocation versus stock selection within those sectors?
We remain overweight on consumption because the theme is benefitting from stronger discretionary spending driven by GST rationalization, easier credit availability under a loose monetary environment, and higher disposable incomes supported by recent income tax deductions. These policy tailwinds, combined with structurally rising urban consumption, premiumization trends, and the expanding footprint of organized players position the segment for sustained growth. Given the backdrop, we believe the theme will continue to deliver robust earnings momentum and gain market share across key categories.
Our exposure to the healthcare sector is more defensive in nature, taking more from the perspective of bringing down the volatility of the portfolio.
IT constitutes 7.26% of our portfolio as on November 30, 2025. The sector is attractively valued and is the beneficiary of significant dollar depreciation, apart from the fact that several stocks here are cash rich.
Our portfolio construction methodology is bottom-up with a macro overlay. Stock selection has been our strength, as has been demonstrated by the long term performance of our Schemes.
Source: JMF MF internal research. Data as on November 30, 2025. Sector(s) mentioned above are for the purpose of disclosure of the portfolio, of the Scheme(s) and should not be construed as recommendation. The Fund manager(s) may or may not choose to invest in these sectors from time to time. Past performance may or may not be sustained in the future and the same may not necessarily provide the basis of comparison with other investments.
4) Risk management and drawdown control in a midcap fund
Midcaps and small caps can see sharp drawdowns in risk-off phases. What specific risk-management tools do you use—such as position sizing, liquidity filters, factor limits or stop-loss disciplines—to ensure that downside volatility stays within your comfort zone without diluting return potential?
The fund managers and the risk department very actively track the liquidity of stocks in our portfolio. Apart from the stress tests manadated by the regulator SEBI, the risk team conducts different stress tests in order to flag off much in advance threats to the portfolio. These are regularly discussed in different committee meetings such as the investment committee and risk committee meetings.
5) Future positioning and capacity management
As the fund scales up over time, capacity and impact costs can become critical in the midcap–smallcap space. Do you have an internal AUM threshold beyond which you would alter the strategy, broaden the investable universe or consider soft-closing the fund? And looking ahead 3–5 years, what kind of return and risk profile should investors realistically expect from JM Midcap Fund?
The Scheme has a growth orientation and would be looking for earnings growth and visibility of earnings in the portfolio. Even now when the Scheme is a little shy of Rs. 1500 crore, we are highly conscious about the liquidity of our portfolio constituents and this monitoring will be strictly observed going forward as well. While we cannot comment on expected returns of the Scheme, we can certainly say that the endeavour is to have an actively managed portfolio which may help in long term wealth creation for investors.