Small-cap mutual funds love these sectors for higher returns

Changing market dynamics always provide a good entry point to the active fund managers to take fresh position in sectors. In 2022, Public sector firms, banking & financial services, and auto stocks gained the most while technology and pharma stocks took a toll. So far in 2023, many stocks from the sectors including FMCG and Auto topped the return chart while many technology and PSU banks stocks clocked negative returns. Here, we looked at the sectoral preference of the smallcap funds category. Fund managers of the smallcap funds mostly prefer bottom-up approach while constructing their portfolio. However, the consolidated data showcases the sectors that are having emerging companies with promising prospects. Here are the top sub-sectors among the smallcap funds category. Currently, there are 24 actively managed smallcap schemes in the industry. Data shown below was as of March 31, 2023. Source: ACEMF.

Chemicals
Sample of smallcap schemes that hold the significant exposure the sector: IDBI Small Cap, Axis Small Cap and Union Small Cap

IT – Software
Sample of smallcap schemes that hold the significant exposure the sector: Sundaram Small Cap, Axis Small Cap and Union Small Cap

Private Banks
Sample of smallcap schemes that hold the significant exposure the sector: Franklin India Smaller Cos, PGIM India Small Cap and Quant Small Cap

Engineering - Construction
Sample of smallcap schemes that hold the significant exposure the sector: HDFC Small Cap, Quant Small Cap and HSBC Small Cap

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Pharmaceuticals & Drugs
Sample of smallcap schemes that hold the significant exposure the sector: UTI Small Cap, Quant Small Cap and Sundaram Small Cap

Auto Ancillary
Sample of smallcap schemes that hold the significant exposure the sector: Bandhan Emerging Businesses, Bank of India Small Cap and DSP Small Cap

Engineering - Industrial Equipments
Sample of smallcap schemes that hold the significant exposure the sector: Aditya Birla SL Small Cap, Sundaram Small Cap and Mahindra Manulife Small Cap

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Hospital & Healthcare Services
Sample of smallcap schemes that hold the significant exposure the sector: Axis Small Cap, ICICI Pru Smallcap and PGIM India Small Cap

Textile
Sample of smallcap schemes that hold the significant exposure the sector: DSP Small Cap, HSBC Small Cap and Bandhan Emerging Businesses

Construction - Real Estate
Sample of smallcap schemes that hold the significant exposure the sector: Franklin India Smaller Cos, Axis Small Cap and HSBC Small Cap

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