Thursday, December 8, 2016

Small-Mid Caps - The “sweet spot” for long term investors!

Lets discuss some Pros and Cons of Small and Mid Cap Funds – 

Pros:
1)  Happy medium: They are the biggest winning stocks of past decade and can balance the two extremes stability and growth potential.

2) Tomorrows Large-Cap:  One of the major reason to invest in small & mid cap companies is that they have potential to become a large cap companies. In 2005 Yes Bank was considered as a mid cap company but during a span of few years Yes Bank as turned out to become one of the biggest private sector bank in the world. 

Cons:
1)  High Volatility: The mid & small cap companies are highly volatile when compared to large cap stock. Due to its high volatile nature they can result into major fluctuations in shorter span which might be wounding.

2)  Uncertain Outcomes: The struggle associated with such firms is high because at initial stages maintaining stability is a task which not all can fulfill. However putting your money in them is like betting on a Dark Horse the more the risk the healthier the rewards. They are the best suitable to the risk seekers.
The best way to get rid of the risk associated with this fund is to generate a cushion for it by investing into the large caps or debt funds which will give balance to the fund and also diversify the investment.

Canara Robeco Emerging Equities Fund: Daily Chart
























Canara Robeco Emerging Equities is the best amongst the small cap & mid cap category and it is ranked 2nd by CRISIL. It aims to generate long term capital appreciation through investing in diversifies mid-cap stocks which have higher probability to turn into bigger corporate in the coming future.


Portfolio Analysis: As per the sectoral holdings Banking & Finance have been most favored sector for this fund as it is contributing 13.33% to the entire portfolio followed by Engineering & Capital Goods and Chemicals Sector. Top Holdings and Sector Allocation for this fund are shown below - 


























Risk Profile: The risk associated with this fund is too high because the total investment is focused on the stocks from small caps and midcaps sector. During the corrective phase or bad times this scripts do not have any lower limits to fall which can turn into capital loss. However every coin has 2 sides as these small size companies have potential to turn large which once happens can add bumper returns to your corpus. It is suitable to investors having high risk bearing ability within the age of 20-40 years.

Investment perspective: This fund has maximum exposure to equity and as per our outlook on Indian Equity markets more of corrective action is still left. Parking through sip route is the best option as of now.

Invest NOW in Canara Robeco Emerging Equities Fund online – Click HERE


 

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