Hot stocks added by top smallcap funds in September

The Smallcap fund category has been the most preferred mutual fund category among investors over the last one year. Data compiled from the Association of Mutual Funds in India (AMFI) shows that a massive one-third of the MF industry equity net flows (Rs 33,336 crore) flocked into smallcap funds over the last one year.
While few smallcap funds with larger asset sizes stopped accepting lumpsum subscriptions, the category still continues to get flows from SIP subscriptions. Large inflows have been a cause of concern for smallcap funds given the current scenario of most of the stocks trading at their peak valuations. Poor liquidity is the problem while taking larger positions in small caps — getting in is easy but getting out is tricky.

However, fund managers of most smallcap funds seem to never abstain from deploying into new opportunities in the smallcap and microcap universes. Instead of holding into cash assets, most of them add new stocks in their portfolios to spread the risk. This has increased the number of holdings in their portfolios. For instance, the average number of equity holdings of the category increased to 86 in September 2023 from 60 stocks seen three years before.
In unusual circumstances, smallcap funds raise their cash holdings. However, the category is now maintaining the cash level relatively low. The latest data shows that more than half of the smallcap funds maintain cash levels at 6 percent and below.
Below are the lists of newly added stocks by the top-performing smallcap funds in September. Source: ACEMF.

Quant Small Cap Fund
Fund managers: Ankit A Pande, Vasav Sahgal and Sanjeev Sharma

Also see: Enhanced Value index funds topped the return chart past year. Here are their top stocks bet

Nippon India Small Cap Fund
Fund managers: Samir Rachh and Tejas Sheth

Axis Small Cap Fund
Fund managers: Mayank Hyanki and Shreyash Devalkar

ICICI Pru Smallcap Fund
Fund managers: Anish Tawakley and Sri Sharma

Also see: Time to rebalance your portfolio? Check out these aggressive hybrid funds that provide stability and high growth

Kotak Small Cap Fund
Fund managers: Pankaj Tibrewal

Union Small Cap Fund
Fund managers: Hardick Bora and Sanjay Bembalkar

DSP Small Cap Fund
Fund managers: Abhishek Ghosh, Resham Jain and Vinit Sambre

Also see: Nifty @20K: Can these low volatile stocks cushion your portfolio volatility?

SBI Small Cap Fund
Fund manager: R. Srinivasan

HSBC Small Cap Fund
Fund managers: Venugopal Manghat and Cheenu Gupta

HDFC Small Cap Fund
Fund manager: Chirag Setalvad

Also see: PMS managers exited from these midcap stocks: Check your portfolio

Sundaram Small Cap Fund
Fund managers: Ravi Gopalakrishnan and Rohit Seksaria

Franklin India Smaller Cos Fund
Fund managers: Akhil Kalluri and R Janakiraman

Also see: How have India’s oldest MF schemes rewarded investors?