Categorized Directory

Main Menu

  • Home
  • Search directory
  • Web crawlers
  • Collect data
  • Indexation
  • Bankroll

Categorized Directory

Header Banner

Categorized Directory

  • Home
  • Search directory
  • Web crawlers
  • Collect data
  • Indexation
  • Bankroll
Indexation
Home›Indexation›How to invest in small cap funds

How to invest in small cap funds

By Ed Robertson
April 16, 2022
0
0

Kirtan Shah: Ideally, if you look at risk return data points, the answer to this question is very simple.

If you allocate an equal proportion to a large, mid and small cap versus a multicap or a flexicap, you will see that on a risk-return basis, the large, mid and small cap provided a much better performance than the flexicap. invest in a multicap or a flexible capsule.

For someone who is very clear that he has at least five, seven years of investment horizon, he should definitely make a large, mid and small cap fork in the fund rather than choosing a multicap or a flexicap.

It’s a better portfolio building strategy than simply investing in two or three multicaps or flexicaps and letting the fund manager decide what he really wants to do.

While you’re trying to invest in a small cap, I certainly wouldn’t advise anyone under the age of five or seven to invest in a small cap, regardless of last year’s performance. been.

In fact, in the current situation, it’s more of a problem because you’re not sure if the reviews are correct to get paid at the time. There is too much macroeconomic overhang and that can certainly have a bigger impact, probably, if the markets are to move south.

The biggest challenge I see on the small cap side is actually the assets under management of the fund. We all know that everyone continues to move towards a fund that has performed well and that assets under management continue to increase.

Let me give an example of the two funds mentioned – Nippon Small Cap and Quantum. Now, both of these funds started in 2013, so they have a good eight to nine year history that you can look back on and see how well the funds have performed.

If you look at fund returns, both have done very well. Nippon now manages nearly Rs 19,200 odd crore of AUM, as of March 31.

If you look at the 251st stock, which according to the SEBI definition is classified as small cap, the market capitalization of this stock is almost as good as the AUM that the fund manages. Now, because of this problem, you will see that much of the AUM is not deployed in the small cap space.

Nippon has 141 stocks they have invested in precisely for this reason because they cannot invest Rs 19,000 crore in small caps.

Exposure to small caps is only 45% of the total portfolio because you have the freedom to move across large caps and mid caps. They have only invested 45% in small caps and this is actually a problem for all small cap funds, at least on the performance side of stocks.

If you look at Quant, it has increased aggressively. They have been able to achieve this over the past 1.5 years thanks to their performance, but they are still close to Rs 1,600 crore AUM. In terms of AUM, Quant is in a much better position than probably Nippon.

They only manage 56 stocks due to the kind of money they have to deploy. They don’t really need to go collect 150 shares. If you look at the small cap exposure in Nippon, it’s 56%, which is probably the highest in most of the funds we’re discussing today.

Talking about a small cap fund where you want the fund to have small cap exposure, lower AUM, higher small cap exposure and lower turnover rate probably works well. So I wouldn’t mind watching Quant Small Cap either.

Related posts:

  1. Circular debt – myth and reality
  2. USS and UK accused of failing to respond clearly to defined benefit reduction proposals
  3. Electric vehicle company Rivian could ask for a valuation of $ 70 billion when it goes public – Bloomberg News
  4. The repayment rate of the 1st tranche of sovereign bonds on gold is 80% higher than the issue price

Categories

  • Bankroll
  • Collect data
  • Indexation
  • Search directory
  • Web crawlers

Recent Posts

  • Live-Action TV Spider-Mans Who Didn’t Appear in No Way Home
  • Bennet bill would create federal definition of school shooting, direct incident data collection
  • The 10 Most In-Demand Entry-Level Remote Jobs Landing Right Now
  • Face-Scanner Clearview accepts the limits of the legal settlement | Economic news
  • Ex-minister embroiled in Hellenic row over staff cuts

Archives

  • May 2022
  • April 2022
  • March 2022
  • February 2022
  • January 2022
  • December 2021
  • November 2021
  • October 2021
  • September 2021
  • August 2021
  • July 2021
  • June 2021
  • May 2021
  • April 2021
  • Privacy Policy
  • Terms and Conditions