Bank of India Mid and Small Cap Equity and Debt Fund: 3X returns in less than a decade

According to SEBI mandate, Aggressive Hybrid Funds invest 65-80% of their funds in equity and equity related instruments while the remaining 20- 35% is invested in debt and money market instruments. This ensures long term capital appreciation due to the equity exposure coupled with downside protection offered by the debt side of the fund. Investors can thus benefit from this diversified approach to investing and enjoy reasonable stability even in volatile markets. The short-term capital gains arising from holding these investments for a period of less than 12 months are taxed at 20%. The long-term capital gains that arise from holding the investments for a period of more than 12 months, exceeding Rs 1.25 lakhs (as per Budget 2024), are taxed at 12.5%. In this article, we will discuss about Bank of India Mid and Small Cap Equity and debt Fund Regular Growth option.

Bank of India Mid and Small Cap Equity and Debt Fund- Regular Growth

The Bank of India Mid and Small cap equity and debt fund was launched in July 2016. The fund is managed by Mr. Alok Singh who has a rich experience of 20 years + in the mutual fund industry. Alok is a Post Graduate in Business Administration from ICFAI Business School and a CFA. He has an impressive track record in fund management both for resident as well as for overseas investors. As part of his previous employment with BNP Paribas Mutual Fund, Alok has won numerous awards for stellar fund performance during his career span. He heads the overall Equity & Fixed Income Investment Operations as Chief Investment Officer. Funds Managed: Bank of India Conservative Hybrid Fund Bank of India Credit Risk Fund Bank of India Mid & Small Cap Equity & Debt Fund Bank of India Flexi Cap Fund Bank of India Balanced Advantage Fund Bank of India Arbitrage Fund Bank of India ELSS Tax Saver.

Bank of India Mid and Small Cap Equity and Debt Fund has an asset under management of Rs 2,500 Cr in Debt & more than 4,000 Cr in Equity (as on August May 25^th 2024). The fund tracks the benchmarks NIFTY Mid Small cap 400 Total Return Index (TRI): 70%; CRISIL Short Term Bond Fund Index: 30%

Wealth Creation

If you had invested a lumpsum of Rs 1 Lakh in the fund at its inception, your investment would have stood at Rs 3.74 lakhs as on 23rd July 2024, giving a CAGR of 17.93%.

An monthly SIP of Rs 10,000/- started in the fund at its inception you would have accumulated a corpus of Rs 23.40 lakhs as on 23^rd July 2024 against a cumulative investment of Rs 9.6 lakhs, and an XIRR of 21.72%. The chart below represents the growth of your investment since July 2016.

Source: Advisorkhoj research as on 23^rd July 2024

Rolling Returns

Given below are the charts representing the 3, 5 and 7-year rolling returns of the fund compared to its category returns. As you can notice, the fund has consistently performed better than the category in the long term.

Source: Advisorkhoj research as on 23^rd July 2024

Consistent Outperformance

Consistent performance is one of the most important attributes of mutual fund performance. Bank of India Mid and Small Cap Equity and Debt Fund is one of the most consistent performers in the Aggressive Hybrid Funds category. The scheme’s performance was in the top quartile in 4 years out of the last 5 years (as on 23^rd July 2024) making this scheme one of the most consistent Aggressive Hybrid Funds in the last 5 years. The chart below shows the returns of Bank of India Mid and Small Cap Equity and Debt Fund versus the Aggressive Hybrid Funds category over various trailing periods (ending 23^rd July 2024). You can see that the scheme has beaten the category across all time-scales.

Source: Advisorkhoj research as on 23^rd July 2024

Portfolio Construct

The Bank of India Mid and Small Cap Equity and Debt Fund has a Mid and Small cap bias, with 45.59% of its assets in the Midcap segment and 33.87% in small cap. The pie-chart below graphically represents the portfolio break up between market segments.

Source: Fund Factsheet as on 31^st May 2024

The top 5 sectors and top 5 holdings of the fund are as follows.

Source: Bank of India Mutual Fund Factsheet as on 31^st May 2024

Why is this a good time to invest in Aggressive Hybrid Funds?

India is in a macro sweet spot being the 5th largest economy in the world and is expected to become the 3^rd largest economy by 2027 (as per IMF’s forecasts). Our GDP grew by 8.2% in FY 2023-24 exceeding earlier forecasts. IMF is forecasting India’s GDP to grow by 6.8% in FY 2025, making it the fastest growing G-20 economy. India’s fiscal deficit in FY 2023-24 is estimated to be 5.8% and will be pared down to 5.1% in FY 2024-25.

In the Debt market, the 10-year Government bond yields declined by 17 bps, while the 1-year (364-day T-Bill) yields softened by 4 bps, indicating gradual mean reversion of the yield curve. The current yields provide attractive investment opportunities for longer duration debt fund investors since they can benefit from price (NAV) appreciation as interest rates fall.

Policy continuity with the formation of a stable Government and impending change in the interest rate cycle provides a favourable environment for both equity and debt investors. It is important for investors to review their asset allocation and ensure that their portfolio is suitably diversified. Since the equity market has climbed back to record highs after the post poll rebound, hybrid funds can add stability and diversification to your investment portfolio.

Why you should invest in Bank of India Mid and Small Cap Equity and Debt Fund?

• Compared to other asset classes, equity has demonstrated the highest potential of wealth creation in the long term. The scheme invests 65 – 80% of its assets in equity.


• The debt portion in the scheme minimizes downside risks and provides stability during volatility.


• As compared to investors managing asset allocations at their end, the fund offers cost & operational efficiency for them.

Who should invest in Bank of India Mid and Small Cap Equity and Debt Fund?

• Investors who want capital appreciation and income over long investment horizons.


• Investors who do not want too much volatility in their investments e.g. new investors.


• Investors who aim to earn better returns compared to traditional savings products albeit with higher risks.


• Investors who have a moderately high to high-risk appetite.


• Investors should have minimum 3-to-5-years of investment horizon.

Consult with your financial advisors or mutual fund distributor, if Bank of India Mid and Small Cap Equity and Debt Fund is suitable for your long-term investment needs.