Hot stocks added by top smallcap funds in September
Fund managers of smallcap funds seem to never shy away from deploying into new opportunities in the smallcap and microcap universes irrespective of market peaks and rich valuations. They spread the risk by adding more stocks to the portfolio
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.
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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.
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Quant Small Cap Fund Fund managers: Ankit A Pande, Vasav Sahgal and Sanjeev Sharma
