Up to 111% return in 1 year! Smallcap MFs made money with these stocks

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Broader markets have managed to outpace during the past year, as sustained inflows chased midcaps and largecaps due to attractive valuations.

As a result, the BSE Smallcap index soared 64% during the past year, while midcap and the benchmark equity index Sensex have gained 64% and 51%, respectively.

The ongoing momentum supported select smallcap mutual funds with Quant Small Cap gaining 111% during the past year.

As of January 31, 2021, Stylam Industries, Tata Steel Long Products, Bharat Rasayan, Fortis Healthcare, Bharti Airtel, Sun Pharma and Mastek were among the top holdings of the fund. Shares of these companies have surged between 5%-217% during the past year.

Commenting on the broader market, S Ranganathan, Head of Research, LKP Securities said, “Several smallcap names across sectors were sought after as a lower interest rate scenario is seen beneficial to them.”

Net asset value (NAV) of IDFC Emerging Business Fund also gained 72%. Shares including Radico Khaitan, Kajaria Ceramics, Navin Fluorine International, NOCIL, TeamLease Services and Gulf Oil Lubricants are among the holdings of the fund.

Siddhartha Khemka, Senior Vice President, Head-Retail Research, Motilal Oswal Financial Services said, “After underperforming for the last two years—mid and small caps are showing signs of strength and the momentum may continue in 2021. Opening up of the economy, the sharp reduction in active COVID-19 cases since September 2020, and strong high-frequency macro data have uplifted sentiment. The vaccination drive has further provided a boost to the Indian market, with much broader participation from mid-caps and small-caps.”

He further added that the drivers of earnings growth are incrementally shifting towards cyclical sectors. Lower interest rates, the prevalence of abundant liquidity, and broad-basing of economic recovery augur well for mid and small caps.

Kotak Smallcap, BOI AXA SmallCap, Edelweiss Smallcap, Principal Small Cap and Motilal Oswal Nifty Smallcap have also gained between 60%-70% since March 9 last year, according to Valueresearchonline.com.

The data also showed that players like Century Plyboards, Sheela Foam, Carborundum Universal, Supreme Industries and Dixon Technologies were among the major holdings of Kotak Smallcap as of February 28. On the other hand, BOI AXA SmallCap held EPL, Sequent Scientific, Galaxy Surfactants, CDSL and Dixon.