Largecaps have been repeating performers of the recovery rally. We wanted to know what made the Largecap so special to be consistent with their returns.
We at smallcase, talked to a few of our smallcase Managers to get their perspective on the topic.
Manish Dhawan of Mystic Wealth described the stock market to a pendulum.
“Markets work like a pendulum, overcompensating on either side. From unabated euphoria to sheer depressing pessimism. Even within the various market caps, the flow of money keeps changing hands.
Stock selection is overrated, and drawdown reduction is underrated.
Success in stock market investing has more to do with not falling and giving away the gains made in the bull market.
Bull market catapults every stock sector in its stride and similarly Bear market decimates everything on its way regardless of pedigree.
We at Mystic Wealth have a smallcase offering named MWT (MysticWealth Tortoise) to play this anomaly precisely. It parks its money in Gold: 15%, Debt: 15% and the remaining 70% shifts between Liquidbees and Niftynext50 based on Trend.”
We also asked Dick Hosy Mody from Ethical Advisers about what he had to say about the current picture of the investing scene in India and he was excited to share his thoughts.
“Ever since I began my investment journey in 1992, markets have taught me to ‘STAY Focussed on the BIG Picture!’. 2021 is no different. Considering this, out of 195 countries in the world, India is expected to be in the top 3 (behind US, China) by 2030. The biggest BULL RUNS have occurred when GDP moves towards $ 5 Trillion, e.g. China, US, and Japan.
India’s GDP has just crossed $ 3 trillion; aim is $ 5 trillion in the next 3 years. This is the golden period. Stay invested in the best businesses run by shareholder-friendly managements with high capital efficiency for Wealth Creation.”
Ashwini Shami from Omniscience Capital pitched in about what makes a great portfolio according to them within the Large Cap space.
“Omni Royals is a curated, well-balanced largecap portfolio. One part gives exposure to the Digital transformation services companies catering to the global economy undergoing a change due to a set of transformative technologies. The other part helps play the Atmanirbhar Bharat theme which is a combination of multiple infrastructure building initiatives such as National Infrastructure Pipeline, National Rail Plan, Vision 2024, DPEPP 2020 which opens high growth opportunities for companies in sectors such as Defence, Power and Railway Infrastructure. The current holdings have attractive yields along with high expected growth rates which are significantly superior to the rest of the pack.”
Talking about Large Caps, Arun Mehra from V.E.C Investments believed in the objective of outperformance against the index on a lower cost structure.
“With a high degree of research coverage in the top 100 companies, one would imagine all stocks being valued appropriately by the market. This in turn would imply that owning the index is the best way to capture the return from a large cap, not to mention the low cost that comes with an ETF.
However, contrary to expectations, the large cap index shows a great diversion of returns within the constituents and several companies giving significantly higher returns versus the index. This inefficiency can be utilized to an investor’s advantage.
The smallcase V.E.C Growth Explorer aims to tap into this opportunity by creating a well-structured and concentrated portfolio within the top 100 companies in India. This is accomplished by a fundamental strategy driven by a contrarian/value approach across the index. With 100 companies and several sectors available to choose from, high levels of governance, strong balance sheets as well as well-established business franchises one is spoilt for choice.
The overall objective of V.E.C Growth Explorer is relative and absolute outperformance versus the index with a lower cost structure.”
And finally, Divam Sharma from Green Portfolio, the purpose of their smallcase within the Large Cap market.
“Historically the largecap stocks have returned a 14% CAGR return during the past 30 years – based on the BSE Sensex 30 index
The growth of the Large Cap stocks in the SENSEX 30 or the NIFTY 50 is a reflection of these conglomerates gaining market share and emerging stronger than they were. The forecasted influx of families to the middle-class bracket and the run-up towards a $ 5 trillion economy are other tailwinds propelling these Large Caps upward.
Our Large-Cap smallcase, the best of Nifty50 is curated to ride this growth. We find utmost discomfort in holding all the Nifty50 portfolio; hence we have curated the smallcase portfolio with only the top 20-25 names. These 20-25 names have been meticulously selected based on an array of factors.
The purpose of our best of Nifty 50 portfolio is simple. Create a tremendous alpha over the Nifty50 by falling less than the benchmark when it falls, and rise higher than the benchmark when it rises.”
(This is a partnered post)
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.