6 fund categories to go for in terms of market cap allocation in 2023
Feroze Azeez, Deputy CEO, Anand Rathi Pvt Wealth, says “the implied exposure should be at least 50-55% in largecaps, 20% in midcaps and about 25% in smallcaps. On January 2, 2023, we realized that smallcap is going to go through a huge price or PE re-rating. So, in terms of market cap allocation, the funds which one should choose from should be in multi-cap category, large cap category, contra, dividend yield and flexi cap. These are the five categories one should focus on. The one other category could be a focused fund which is SBI Contra. Don’t get into sectoral bets, especially in a year preceding a general election.”
Can you give an overview on what kind of strategies on a broader level have worked for what kind of funds?Yes, there are several strategies which have worked while some have not worked in different periods of time.
If you look at the most contemporary period, what has worked has been value. Post Covid value has always outperformed the broader market largely, but yes, if we break that down into different phases of super bull phase, like last financial year was not a great financial year from a Nifty standpoint, but this financial year we have seen about Nifty go up about 11%. To answer your point in question, dividend yield which is also in effect value because quite a few dividend yield stocks were quoting at reasonable valuations, so value dividend yield have done phenomenally well post Covid.
What has also worked in pockets is the contra fund because somebody taking a contrarian bet last year made a lot of money because the markets were not a one-way street.
