Kaustubh Belapurkar, Director of Fund Research at Morningstar Investment Adviser, spoke on CNBC-TV18 about the importance of mid- and small-cap funds in a portfolio. Below is an extract from the interview where he discusses specific funds.
DSP Blackrock Microcap Fund
This microcap fund is positioned as a small- and micro-cap fund from DSP BlackRock's stable. What it looks to do is invest predominantly into the small-cap segment, market capitalisation of less than Rs 3,000 crore. The way fund manager Vinit Sambre has been managing the fund is by a pure buy-and-hold strategy. He has been doing this for the last 6 to 7 years and once he has gotten to that whole buy-and-hold play, he can ride that market wave.
That is where he has delivered that significant outperformance over the small- or some of his mid-cap peers. So clearly that strategy is working well for him and that is where derives the returns from.
Franklin India Prima
This fund is more into the larger mid-cap plays. Fund manager Janakiraman R is the mid-cap specialist at Franklin Templeton. He has an excellent team of analysts backing him up.
What is important to understand is that when you go down to the smaller capitalisation space, there is inadequate sell-side research coverage, if I may say so. This is where the resources of the asset manager come into play, in terms of packing that up with good quality research and coming up with ideas to invest into.
So Franklin Templeton has got an excellent team set up in terms of the analysts; the managers too double up as analysts. What is important to understand is where has he derived his returns from. So some of the stocks that have stood out and which he has identified early are Amara Raja Batteries, Finolex Cables and Torrent. These are some of the ideas that have done well for the fund.
Not only does the fund manager play the growth story, but also looks at certain names which could potentially be beaten down stocks that could add a slightly better flavoured value to the portfolio and results in an excellent overall return on his portfolio.
