Portfolio rebalance: How Parag Parikh Flexi Cap, Quant Small Cap repositioned in September

Parag Parikh Flexi Cap Fund and Quant Small Cap Fund made notable adjustments to their portfolios in September, signalling evolving investment strategies among Indian mutual funds. Parag Parikh Flexi Cap Fund increased exposure to four prominent bank stocks and ITC, while trimming its holdings in Maruti Suzuki. Quant Small Cap Fund raised its stake in Adani Power and several other companies, reflecting a continued focus on small-cap growth opportunities. Both funds seek to optimise their portfolios amid dynamic market conditions, with Parag Parikh Flexi Cap Fund reporting an increase in assets under management (AUM) to 1.19 lakh crore at the end of September, up from 1.15 lakh crore in August.

The Parag Parikh Flexi Cap Fund, managed by a team including Rajeev Thakkar and benchmarked against the NIFTY 500 (TRI), held 27 stocks in September, down from 28 the previous month. The fund’s increased stakes in four banking stocks and ITC were paired with a reduction in Maruti Suzuki exposure by 50,000 shares. Additional increases were made in Cipla, Dr Reddy’s Laboratories, Power Grid Corporation of India, Indian Energy Exchange, Zydus Lifesciences, Zydus Wellness, and EID Parry India. The largest addition was 1.76 crore shares of Zydus Wellness, raising the holding to 2.20 crore shares.

The fund exited IPCA Laboratories by selling 2.18 lakh shares and made divestments in Himadri Speciality Chemical, HP Adhesives, Laxmi Dental, and Taj GVK Hotels & Resorts. Two new stocks were added: Aptus Value Housing Finance India and Intellect Design Arena, with holdings of 36.49 lakh and 5.03 lakh shares, respectively. These moves reflect a selective approach to portfolio construction.

The fund house reiterated its constructive stance on large infrastructure, hotels and hospitality, pharmaceuticals, consumption, and telecom. It highlighted increased exposure to certain non-banking financial companies (NBFCs) and public sector banks, as well as a tilt towards large-cap stocks. "Our portfolio remains tilted towards large caps, and overall liquidity continues to be strong. Exposure to select mid- and small-cap stocks has been increased across most equity and hybrid schemes. We maintain a positive outlook on large infrastructure, hotels & hospitality, pharmaceuticals, consumption, and telecom, while selectively adding positions in NBFCs and PSU banks," the fund house stated.

Quant Small Cap Fund, managed by Sandeep Tandon and benchmarked against the Nifty Smallcap 250 TRI, increased its holdings in Adani Power, Aster DM Healthcare, Bata India, Usha Martin, and Zydus Wellness. The most significant increase was in Adani Power, where the fund added 4.91 crore shares, raising its total to 6.04 crore shares in September from 1.13 crore in August.

Quant Small Cap Fund also expanded its positions in Zydus Wellness, Usha Martin, Aster DM Healthcare, and Bata India. The fund’s approach underscores its ongoing strategy to identify and invest in small-cap companies with growth potential while aligning with its objective of generating capital appreciation through a diversified portfolio.

Portfolio adjustments across both funds highlight a trend of selective stock additions and exits, as well as an increased focus on particular industry segments. Parag Parikh Flexi Cap Fund’s assets under management rose to 1.19 lakh crore at the end of September. Quant Small Cap Fund reported holding 95 stocks at month-end, with an AUM of 29,288 crore. Both funds continue to adapt to sectoral opportunities as they arise.

The investment strategies applied by these funds are informed by detailed market analysis and a commitment to long-term capital growth. Parag Parikh Flexi Cap Fund has also communicated a change in its fundamental attributes to unitholders, with the introduction of an Income Distribution cum Capital Withdrawal (IDCW) option effective from 31 October. This addition will allow investors to choose between payout and reinvestment of IDCW, although the fund’s core portfolio will remain unchanged.