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Small caps are the top performers over the last one and three-year periods. Why do you think that the rally will continue and what is your outlook on small-cap sector for the next three years?
Small cap offers wide variety of opportunities across sectors. These smaller companies have multiplied in the market, they often have solid balance sheets and are expanding rapidly.
Additionally, the increasing scale of these small-cap firms indicates that they have room to grow significantly. These businesses are also producing enormous quantities of cash flow, which strengthens their standing as attractive investment options in the market.
Motilal Oswal Mutual Fund has been around for quite over 13 years. Why small cap fund now?
We have first built necessary skill sets to explore opportunities in small-cap segment. Today, we have 140 small cap stocks under our research radar. Also, currently, 20% of our total equity assets are invested in small-cap stocks. So, gradually, we have developed an expertise in this segment.
Also, considering the upcoming investment opportunity in small cap segment, we feel this is an opportune time to launch a small cap fund.
Why should MFDs opt for the Motilal Oswal Small Cap Fund?
Developing a differentiated portfolio requires striking a balance between diversification and concentration. The goal is to create a concentrated but diversified portfolio to lower the risk associated with any one industry or stock.
Further, risk assessment is crucial for effective small-cap investment. We plan to actively participate in low market cap opportunities that are sometimes overlooked by the bigger market size.
Small cap universe offers exposure to many emerging sectors like defence, e-commerce and so on. Which are the sectors that the fund will invest in?
The base of our investing strategy is identifying growth drivers that will drive profit expansion for potential investments. At the core of our strategy are key sectors like Made in India, financial inclusion, healthcare ecosystem and urbanization, which we believe will significantly benefit in the future.
Our top priorities are investments that strike a balance between growth potential and fair value, with a focus on quality and an evaluation of the possibility of profitable growth over the long term. Our focus on quality and growing longevity at fair pricing drives our investment options and ensures a cautious yet proactive approach in an environment that is constantly changing.
You can watch the complete video interview on Cafemutual YouTube channel.
