'Large cap 50%, midcap 20%, small cap 30%': Anand Rathi Wealth's Feroze Azeez shares investment plan for young investors

The Sensex and Nifty are surging at record levels. A buoyant equity market and an improved performance of mutual funds (MFs) on the returns chart have made investors rethink their investment strategies. As per the latest data from the Association of Mutual Funds in India (AMFI), equity MF schemes recorded investments worth Rs 35,270 crore in the period between August and September 2023, which is almost seven times of the Rs 5,550 crore in the previous three months -- May, June, July.

Net SIP investments in equity schemes increased from Rs 13,100 crore to Rs 18,650 crore in the same period.

Speaking to Business Today TV, Anand Rathi Wealth's Deputy CEO Feroze Azeez shared his insights about increased retail investors’ appetite for equities, strategic sectors for investors, and how to trade in such volatile markets.

Talking about investments in equity funds, Azeez said: "Large cap 50 per cent, midcap 20 per cent, small cap 30 per cent. This is a little different as a small cap should be a small portion. I personally believe the bottom 250 companies have a lot of potential. But there are cases of huge valuation. Also, there are some large stocks which are above 80 PE, 100 PE."

Small-cap mutual funds offer the potential for explosive growth and substantial returns. The BSE SmallCap index, which measures the performance of the small-cap universe, is up more than 32 per cent in the current calendar year.

AMFI data shows that small-cap funds saw net flows of Rs 4,495 crore in October, much higher than the previous month’s net flows of Rs 2,678.47 crore—small-cap funds had registered strong inflows of nearly Rs 4,265 crore in August.

Azeez further shared his favoured list of investments looking at the current market conditions. "On the large-cap side, I don't think you need to take a conventional large-cap fund to get a large-cap exposure. Like a Flexi cap and mid-cap, which have skew towards large cap but are not classified as large-cap funds. I would choose the DSP Equity Opportunities Fund and HDFC Flexi Cap Fund are large cap heavy but do not have the nomenclature of large cap. If you look at HDFC Flexi Cap, Roshi Jain has done a phenomenal job in the right-to-wrong ratio," Azeez explained.

HDFC Flexi Cap Fund-Growth is a flexi cap mutual fund scheme from Hdfc Mutual Fund. It was launched in December 1994 and has Rs 39,396 crores worth of assets under management (AUM) as of September 30, 2023. Its net asset value is Rs 1,451.08.

The fund's top 5 holdings are in HDFC Bank Ltd., ICICI Bank Ltd., National Thermal Power Corp. Ltd., HCL Technologies Ltd., Cipla Ltd.  

Azeez also recommended Kotak Emerging Equity Scheme in the mid-cap section and HDFC Small cap, Quant Active Fund, SBI Contra Fund.

Sharing his advice for the young investors, Azeez said that the newbies should remember that the markets would fall and the same buoyancy won't be there.

"When investing in equity, one should remind themselves that the markets would fall. There is an average fall of 14-15 per cent every year to peak to turf, one has to note that. If you can't digest this and wonder why the markets fell, it will not work."

Kotak Emerging Equity Fund Direct-Growth is a mid-cap mutual fund scheme from Kotak Mahindra Mutual Fund, which was launched in 2013. Kotak Emerging Equity Fund Direct-Growth has Rs 33,700 Crores worth of assets under management (AUM) as of September 30, 2023. 

The fund has given returns of the last 1-year are 26.81 per cent. Since launch, it has delivered 20.82 per cent average annual returns. The fund's top 5 holdings are in Supreme Industries Ltd., Persistent Systems Ltd., Solar Industries India Ltd., Schaeffler India Ltd., Cummins India Ltd.

HDFC Small Cap Fund Direct- Growth is a small-cap mutual fund scheme from Hdfc Mutual Fund, which was launched in 2013. HDFC Small Cap Fund Direct- Growth has Rs 23,184 crores worth of assets under management (AUM) as on September 30, 2023.

HDFC Small Cap Fund Direct- Growth has given returns of 39.78 per cent in last one year. Since launch, it has delivered 20.85 per cent average annual returns. Its NAV is Rs 126.17.

Quant Active Fund Direct-Growth is a multi-cap mutual fund scheme from Quant Mutual Fund, which was launched in 2013. Quant Active Fund Direct-Growth has Rs 6,060 Crores worth of assets under management (AUM) as of September 30, 2023. 

Quant Active Fund Direct-Growth has given returns of 16.75% in last 1-year period. Since launch, it has delivered 20.83 per cent average annual returns.

The fund's top 5 holdings are in the Reserve Bank of India, Reliance Industries Ltd., Aurobindo Pharma Ltd., Escorts Kubota Ltd., JIO Financial Services Ltd.

Also read: Motilal Oswal AMC launches active fund after a gap of 7 years. Check details of Motilal Oswal Small Cap Fund here

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