Understanding the Mid and Small Cap Equity Space with Abakkus Asset Managers Asset Managers

The financial landscape is ever-evolving, and understanding the nuances of the mid and small cap equity space can be challenging. Recently, a deep dive into this topic was provided in a discussion between Mr. Aman Chowhan of Abakkus Asset Managers & Mr. Kamal Manocha – Founder & CEO of PMS AIF WORLD, shedding light on their perspective and strategies in the current market scenario.

Over the past three years, the financial world has witnessed a shift with respect to the rise of Value Investing. With interest rates on the rise, the value style of investing has gained traction. This is in stark contrast to the previous decade when low interest rates propelled growth stocks to the forefront. However, with the current high interest rates, discerning value in stocks has become a tad more intricate. This raises an intriguing question: Will growth stocks reclaim their throne if interest rates dip in the future?

Abakkus Asset Managers has carved a niche for itself in the financial realm. Their consistent performance has placed them among the top five products over recent years. However, every high is followed by challenges. The looming question is whether the forthcoming years will pose hurdles for Abakkus Asset Managers or not?

Since April, markets worldwide have been on an upward trajectory, with Indian markets reaching unprecedented highs. This rally isn’t confined to India; it’s a global phenomenon. A significant catalyst for this surge has been the adept handling of financial crises by central banks across the globe.

Abakkus Asset Managers’s Investment Mantra

Abakkus Asset Managers prides itself on its disciplined approach to investing, especially in the mid, small, and micro-segment. Their strategy revolves around crafting a diversified portfolio spanning across large, mid, small, and micro caps. They also harbor a keen interest in emerging themes and sectors, such as railways, defense, and the burgeoning digital transformations. They believe that these sectors, often overlooked in the larger investment narrative, hold significant potential for growth and value creation.

The mid and small cap sectors are dynamic, influenced by global trends, interest rates, and emerging market themes. Abakkus’s insights suggest that while the journey may be filled with challenges, the potential for growth and value creation is immense. Their emphasis on diversification, emerging sectors, and fundamental investing offers a roadmap for investors keen on exploring this niche.

Post an impressive ongoing performance by the AIFs being offered by Abakkus Asset Managers, they have recently launched Abakkus Diversified Alpha – 2, a close ended Category 3 AIF.

The Abakkus Diversified Alpha Fund Cat III AIF stands out with its distinct investment approach. Central to its design is a benchmark-independent portfolio of about 40 companies, offering a varied mix of opportunities. Using a “Bottom Up” approach, the fund focuses on companies with promising growth prospects. It maintains a disciplined strategy, diversifying across market caps and sectors. The fund emphasizes long-term, value-driven investing, aiming for a 3-5 year holding period. It also strategically engages in select IPOs as an Anchor Investor and delves into QIB and Pre IPO sectors, to a maximum exposure of 10-15%.

The fund’s unique 40:30:20:10 asset allocation strategy divides investments into 40% large caps, 30% mid caps, 20% small caps, and 10% micro caps. This ensures a broad market reach and reduced volatility, especially with significant exposure to large and larger mid cap segments. The fund’s commitment to alpha creation is evident in its focus on mid, small, and micro cap sectors. Risk discipline, position sizing, and a thoughtful approach to liquidity management, especially by assigning smaller weights to smaller capitalizations, further define its strategy. It offers the luxury of focusing on long-term gains without the daily liquidity concerns.

At its core, Abakkus Asset Managers believe in the power of bottom-up fundamental investing.

They are pioneers in generating their own investment ideas, backed by a robust investment team. Their independence from market-driven idea generation sets them apart.

The financial world is intricate, especially the mid and small cap equity space, but with stalwarts like Sunil Singhania & Aman Chowhan of Abakkus Asset Managers providing insights, navigating it becomes a tad easier. For investors, both seasoned and new, understanding the perspectives of industry leaders can be the guiding light in their investment journey.

During the ongoing market corrections, as a result of frothy valuations – majorly in the Mid & Small Cap Segment of the Equity Markets, there has been a drop in price-to-earnings ratios, and savvy investors may view this as an ideal time to step into the market. They can take advantage of the lower prices to craft a portfolio ready for upcoming expansion.

The sustained consumer behavior, despite inflation and elevated rates, indicates prospects for widespread growth in the near future – and we, at PMS AIF WORLD understand this profoundly and help every investor make informed investment decisions based on their current portfolio and profile.

We assure you the best investment services backed by in-depth knowledge, driven by content, and analytics.