India’s best performing small-cap mutual fund was bullish on these stocks

Indian markets have lost all the gains notched over the last one year and are now trading a sixth below their peak, in sync with global bearish sentiments and concerns about interest rate hikes in the country and abroad.

The small-cap space has also seen a correction and the BSE Small Cap index, which comprises over 900 stocks and grew five-fold in the last decade, has declined by around 3% over the last twelve months.

But not all small-cap investors are losing sleep. In fact, the best performing small-cap mutual fund churned out a robust 15% growth in its net asset value in the same period.

This happens to be the direct plan of Canara Robeco Small Cap Fund. The fund has an asset size of Rs 2,560 crore as of May 31, 2022. It has a low portfolio turnover of 17%. Its annual returns since launch are close to 27%, making it one of the best mutual fund schemes to play with over a long term.

Where did it invest?

The fund has 60 stocks in its portfolio basket, with the top ten comprising around a quarter of the total.

In terms of sectors, it is overweight on financials, services, materials and construction compared to its peers. At the same time, it is underweight on capital goods, chemicals, technology, healthcare, metals and mining, automobiles and consumer discretionary compared to the overall small-cap mutual funds group.

Its top holdings include Schaeffler India, VRL Logistics, KPR Mills, City Union Bank and Cera Sanitaryware.

If we look at the stocks where it increased its exposure last quarter, we get names like City Union Bank, Cera Sanitaryware, CreditAccess Grameen, Can Fin Homes, Grindwell Norton, Persistent Systems, EID-Parry (I) and  MindTree.

The fund also increased its exposure to Century Textiles & Industries, KNR Constructions, NOCIL, Timken India, Mold-Tek Packaging, VIP Industries, PNC Infratech, and one large-cap stock: UltraTech.