The year 2020 was a positive one for most of the PMS schemes as key benchmark indices rallied by about 15 percent each. In 2021 though many investors booked profit ahead of the Union Budget on February 1.
The Nifty50 fell by about 2.5 percent in January, and almost 70 percent of the PMS schemes tracked by PMSBazaar.com outperformed the index in the same period. Top funds generated 8-9 percent return in January, and about 30 percent of the schemes fell more than Nifty.
The sharp fall in the equity market was also reflected in the returns of Portfolio Management Schemes (PMSes) as about 68 percent of the schemes generated negative returns during the month. Of the 193 schemes PMSBazaar.com looked at, 131 fell into the red, while two funds ended flat.
Valentis Advisors' Rising Star Opportunity was the top gainer in January, rising 9.08 percent on a month-on-month basis. The small & mid-cap focused fund is managed by Jyotivardhan Jaipuria and was among the top gainer from this space in December as well, logging 9.08 percent gains.
Invesco's Caterpillar (7.51 percent), Negen Capital's Smallcap Emerging (4.66 percent), Phillip Capital's Emerging India Portfolio (4.43 percent), Geojit Financial Services’ Advantage Portfolio (4.2 percent) were the other top performers in January 2021.
We have collated a list of funds that have declared their January stock holdings.
A close look at the top holdings of these funds can give investors some clue as to where the top fund managers are betting their money on.
Note: The list should only be considered as a reference to shortlist stocks for individual portfolios and not as buy recommendations.
Valentis Advisors' Rising Star Opportunity which delivered highest return in January is bullish on Neuland Laboratories, Ganesha Ecosphere, JB Chemicals, Yuken India, and VA Tech Wabag etc. among others.
Invesco Caterpillar midcap portfolio that delivered 7.5 percent has Tata Elxsi, Tata Motors, Teamlease Services, Balkrishna Industries, and United Breweries are some of the top picks.
Negen Capital Smallcap Emerging portfolio that rose 4.6 percent has Greenpanel Industries, Intellect Design, Kotak Mahindra Bank, Bajaj Finance, and Sirca Paints, etc were some of the top picks in the portfolio.
What should investors do?
Most of the funds that outperformed the index in the month of January are from the small & midcaps space.
The S&P BSE Midcap index rose 0.79 percent while the S&P BSE Smallcap index fell 0.6 percent in the month of January compared to about 2.5 percent fall seen in the Nifty50.
Experts are of the view that small & midcaps continue to remain an attractive bet especially after the Budget which has laid the foundation for India to touch double-digit growth or a $5 trn economy by 2024. The underperformance in the small & midcap space in the recent past also makes them an attractive paly.
“From the valuation point of view, large caps seem to be trading at a comparatively higher premium as compared to the mid and small caps,” Likhita Chepa, Senior Research Analyst at CapitalVia Global Research Limited told Moneycontrol.
“This might be the reason for the investors revisiting their asset allocation in the equity segment and shifting a considerable amount of their investment from the large to the mid and small caps,” says Chepa.
Small & Midcap stocks have also rallied, more in percentage terms but continue to see more opportunity as the domestic economy recovers fully from COVID shock, brokerage firms, Edelweiss said in a report.
“We see three drivers for small and midcap stocks. First is the possibility that higher government expenditure due to a more relaxed glide path will allow the Indian economy to heal faster. SMID cap stocks are more aligned to the domestic economy and the recovery thereof,” it said.
The report further added that the Monetary policy is likely to be supportive in FY22, and the small-sized firms are now slowly beginning to get benefits of loose monetary policy which has benefited only bigger firms until recently.
And, finally, the near 25% rally in frontline indices has coincided with record FPI flows into equity markets. But, the domestic flows which are more focused on companies outside of the large-cap universe has been set sellers. These funds are likely to remain buyers of dips in SMID space, explains the report.
Edelweiss estimates that Small and Midcap space is likely to yield a large number of opportunities over the next few years and would continue to be part of the Indian growth story.Disclaimer
: The views and investment tips expressed by experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.