.@NipponIndiaMF Small Cap is the biggest fund in its category.
There’s a good reason why investors rushed to invest money in it.
Since the fund started, it has consistently beaten the benchmark by a wide margin (See graph 👇).
Let’s look at its performance and strategy.
A 🧵
There’s a good reason why investors rushed to invest money in it.
Since the fund started, it has consistently beaten the benchmark by a wide margin (See graph 👇).
Let’s look at its performance and strategy.
A 🧵
Let’s dive deeper into its performance first.
Nippon India Small Cap has a stellar record against its peers, too.
After SBI Small Cap, it’s the second-best fund in the small-cap category when we look at the 5-year rolling returns since 2010. (check image 👇)
Nippon India Small Cap has a stellar record against its peers, too.
After SBI Small Cap, it’s the second-best fund in the small-cap category when we look at the 5-year rolling returns since 2010. (check image 👇)
The fund has a good track record of protecting investors’ downside.
Since its launch, the benchmark has seen negative returns in 19 quarters. The fund has fared better in 18 of them.
Against the category average, it has done better in 10 out of 18 quarters.
Since its launch, the benchmark has seen negative returns in 19 quarters. The fund has fared better in 18 of them.
Against the category average, it has done better in 10 out of 18 quarters.
To mitigate risk, the fund manager, Samir Rachh, uses diversification.
The fund has over 160 stocks against the category average of 69.
Hardly any stock gets an allocation of more than 3%.
The following table shows the top holdings of the fund👇
The fund has over 160 stocks against the category average of 69.
Hardly any stock gets an allocation of more than 3%.
The following table shows the top holdings of the fund👇
The high number of #stocks in the portfolio may look odd.
But the fund manager has little choice due to the fund’s size.
Small-cap stocks have liquidity problems due to their size.
Diversification helps to overcome this.
But the fund manager has little choice due to the fund’s size.
Small-cap stocks have liquidity problems due to their size.
Diversification helps to overcome this.
During the Morningstar Investment Conference India, Rachh explained the logic.
He said diversification helps him in three areas:
1. It allows him to ride his winners
2. It reduces volatility
3. It allows him to generate a much better risk-adjusted return
He said diversification helps him in three areas:
1. It allows him to ride his winners
2. It reduces volatility
3. It allows him to generate a much better risk-adjusted return
With the rising AUM, Rachh has also inched up the fund’s exposure to large-cap stocks.
Currently, Nippon India Small Cap’s allocation to large-cap companies is almost 2 times the category average.
See graph 👇
Currently, Nippon India Small Cap’s allocation to large-cap companies is almost 2 times the category average.
See graph 👇
While picking stocks, Rachh goes for companies with high-growth potential, available at attractive valuations.
The outperformance of the fund indicates that Rachh has been successful in finding such winners.
The following table shows some of the top performers 👇
The outperformance of the fund indicates that Rachh has been successful in finding such winners.
The following table shows some of the top performers 👇
Nippon India Small Cap has been a consistent performer.
That said, small caps are always a high-risk bet.
If you plan to invest in it, stay prepared for the volatility and hold it for at least 7 years.
That said, small caps are always a high-risk bet.
If you plan to invest in it, stay prepared for the volatility and hold it for at least 7 years.
In the small-cap category, we have also reviewed SBI Small Cap and Axis Small Cap.
SBI Small Cap:
Axis Small Cap:
In the coming days, we will analyse more funds.
SBI Small Cap:
Axis Small Cap:
In the coming days, we will analyse more funds.
This is a standalone in-depth review, not a fund recommendation.
The idea is to help you understand funds before you invest in them.
If you want to see the best fund in any category or wish to compare multiple schemes, please log into the app or visit etmoney.com
The idea is to help you understand funds before you invest in them.
If you want to see the best fund in any category or wish to compare multiple schemes, please log into the app or visit etmoney.com
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Please like, share, and retweet the first tweet.
For more threads, follow us.
Also, click on the bell icon in the profile section so you don't miss any threads.🔔
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