Bulls managed to control the market in December with benchmark indices gaining about 7 percent each during the month and around 15 percent each in the year 2020. Meanwhile, small & midcap indices outperformed rising about 20 percent each in the same period.
Small & midcaps were in the limelight after two straight years of underperformance. Even the PMS schemes that outperformed were mostly from the broader market space.
Portfolio Management Services (PMS) cater to wealthy investors with portfolio sizes exceeding Rs 50 lakh. The professional fee structure is also different from a regular mutual fund (MF).
Out of 191 schemes that PMSBazaar.com tracks, 44 posted gains more than Nifty in December. Negen Capital’s Smallcap Emerging fund, which is a multicap theme was the top gainer in December, rising 12.83 percent on a month-on-month basis.
The other four schemes which have outperformed Nifty50 in December are Credent Asset Management Company’s Growth Portfolio, Concept Investwell’s Legend scheme, TCG Advisory Services Multicap Fund delivering more than 10 percent each in December.
We have collated a list of funds that have declared their December 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.
Negen Capital’s Smallcap Emerging Fund which gave about 13 percent return includes stocks like Greenpanel Industries, Intellect Design Arena, Kotak Mahindra Bank, Bajaj Finance, and Sirca Paints, etc.
Credent Asset Management Growth Portfolio which gave nearly 11 percent return in December includes stocks like Power Finance Corp, HCL Technologies, Mphasis, Cipla, and Bayer Cropsciences, etc. among others.
Concept Investwell Pvt Ltd which is a largecap fund gave a 10.8 percent return in December. The portfolio includes stocks like Infosys, ICICI Bank, Axis Bank, HDFC AMC, and State Bank of India, etc. among others.
TCG Advisor’s Multicap fund rose more than 10 percent include stocks like Crompton Greaves Consumer, Dr. Reddy’s, SRF, Coromandel International, and Hindalco Industries etc. among others.
Stallion Asset Core portfolio which is managed by fund manager Amit Jeswani invests in stocks like APL Apollo Tubes, Avenue Supermarts, Reliance Industries (Partly Paid), Dixon Technologies, and Bajaj Finance etc. among others.
What should investors do?
The focus will now shift towards the broader market space which are under-owned and has underperformed in the last two years as compared to largecaps. There is a valuation comfort in the broader market space and historically when the economy has shown green shoots, small & midcaps have got investor attention.
“Midcaps and small-caps have underperformed large-cap space for a long time now since Jan 2018. Many of them have resorted to cost-cutting, become leaner, and have got rid of excess leverage during the time period,” Prasanna Pathak, Head of Equity & Fund Manager Taurus Mutual Fund told Moneycontrol.
“Also, a broad-based pick-up in the economy should benefit them more. As discussed above, in a scenario of ample global liquidity, money have already started flowing to these companies. I think mid-cap and small-caps should do well for the next 2-3 years,” he said.
Naveen Kulkarni, Chief Investment Officer, Axis Securities also feels that the Mid and small caps will be preferred in 2021. “We believe that if market volatility remains in the manageable zone, then mid and small caps will outperform the market in 2021,” he said.
However, given the recent runup seen in prices investors will be better off making a portfolio that has a mix of good largecaps and midcaps. Largecaps will give support if D-St undergoes a profit-taking dip while Midcaps will continue to add alpha.
“Between large and mid-caps we prefer large-caps as they could be more resilient in any future correction and also remain the favourites of FPIs,” Rusmik Oza, Executive Vice President, Head of Fundamental Research at Kotak Securities told Moneycontrol.
“The BSE Small cap Index is still underperforming the Nifty-50 because of the steep erosion in market cap over the previous two years. Since the small-cap space is an ocean one can do individual bottom fishing with proper research and reading,” he said.
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.