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By Koel Ghosh

The recent launch of our S&P Dow Jones Indices India Index Dashboard brought to my attention the S&P BSE Small Cap Index. While the month's report card was mostly green for the Indian indices due to the optimism in the Indian stock markets, the S&P BSE Small Cap Index did shine through.

  • The S&P BSE Small Cap Index returns as on May 30,2014 was 54.36% (based on total return index) and 51.69% (based on price Index). Further, its year to date return was 37.91% while it clocked in a one month return of 20.41%.
  • During the one year period ending May 30, 2014 the top 3 sectors attributing to this growth were Industrials, Materials and Consumer discretionary.
  • The top gainers contributing to the index growth in the one year ending May 30, 2014 were PMC Fincorp Limited and Sulabh Engineers & Services Ltd. with the top 10 list provided below
Security NameStock Price Change (%)Stock Total Return (%)Contribution To Index Return
PMC Fincorp Limited501.07%501.66%2.23%
Sulabh Engineers & Services Ltd.212.82%212.82%1.41%
Risa International Ltd.110.47%110.47%1.19%
Amtek Auto Limited178.94%179.95%1.12%
Tilak Finance Limited190.74%190.74%1.11%
CCL International Limited275.42%275.42%1.05%
Kelvin Fincap Ltd.254.49%254.49%1.02%
Sintex Industries Limited329.37%329.37%0.95%
VA Tech Wabag Limited155.53%159.54%0.95%
PTC India Limited97.36%97.36%0.90%

Source: Asia Index Pvt. Ltd. Holdings Data as of S&P BSE Small Cap 31 May 2013 through 30 May 2014

If we compare the S&P BSE Small Cap Index with the benchmark S&P BSE SENSEX or even the broad market representative S&P BSE 500 for this one year period, the outperformance to both these broad market indices is clear.

(click to enlarge)

Source: Asia Index Private Limited, One year total return Performance for the period ending 30 May, 2014

IndicesOne year Total Returns %
S&P BSE SMALL CAP (TR)54.36%
S&P BSE SENSEX (TR)24.04%
S&P BSE 500 (TR)25.52%

Source: Asia Index Private Limited. One year returns for the one year period from 31 May 2013 to 30 May 2014

S&P BSE Small Cap Index
Annualized Total Returns54.37%
Annualized Standard Deviation15.17%
Return per unit of risk3.58

The S&P BSE Small Cap performance since inception has been 23.75% (Total return performance dated April 1, 2003 to May 30, 2014)

This sector is definitely displaying a new trend and one always needs to put this in perspective with the long-term performance statistics to get a good understanding of overall performance.

Capturing sector performance can easily be done through passive investing, which again highlights the advantages of passive investing. Passive or Index Investing allows investors to get access to such index returns with very little effort and the trends in the sector are easily tracked through its historical performance. In India, the trend of index investing is just about picking up with the existing offering in index funds and ETFs.

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Source: Is Small The New Big?