First of all, what they are saying about over valuation of small cap funds and too much fund flow into small cap is worrisome. 30% funds are going to small cap while their market cap as well as profit pool is just 9% .So it means, 21% extra funds are getting pumped in small cap stocks. And they are not even counting the Smallcase as well as PMS of small cap.
BUT,
We also need to see the commercial angle behind all this. They dont have a small cap fund. And their main competitors are not other flexicap funds but other small cap funds which are taking away their fund flows. So they have to find excuses to badmouth about small cap funds and small cap stocks.
Secondly we cannot ignore the awesome performance given by most small cap.funds, around 22-24% returns over a long period of 10 years. And this period includes all downturns and volatility. Still these funds gave very good returns. We cant take away this success from them. PPFAS are giving lame excuses for this.
If in future, they launch small cap.fund, they will have to eat all these words.
Also some points were good. I came to know why even after being multibagger , alkyl amines, Mold tek etc remain small cap only…Because their business model doesnot.permit them to become mid cap.or large cap.
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