Small cap stocks in the eye of fund managers

In 2017, small-cap stocks have performed well and many fund managers have increased the exposure of their fund to small-cap stocks. According to our data analysis for all the holdings at the end of December 2017, 16 per cent of total value of assets under 550 mutual fund schemes is assigned to small-cap stocks.

Fund managers have diversified the investment in small-cap stocks in various sectors. However, infrastructure and power sector remained the favourite among them. According to the data from ACE MF, as on December 2017, Kalpataru Power Transmission, IRB Infrastructure Developers, Future Supply Chain Solutions, KEC International, Ipca Laboratories are the top five picks in terms of the value of the investment of fund managers among the 550 mutual fund schemes as on December 2017. These stocks forms, a total investment value of Rs. 8,581 crores and 54 per cent of top 10 small-cap holdings. The long-lasting success story of infrastructure made the infrastructure sector more attractive avenue for the fund managers. Going ahead, the infrastructure sector is seen to be very opportunistic sector with the higher budgetary allocation in coming years.

Going ahead, IRB infrastructure was the most favourite stock for fund managers, 78 schemes have invested in the scrip and the total value of investment stands at Rs. 1,646 crore. Kalpataru Power Transmission is another stock where mutual fund schemes have employed around Rs. 2,246.1 crore corpus. This means the fund managers have invested in small cap stocks with a sectoral strategy to take a calculated risk and enlarge the returns.