Fund Manager Talk | Many smallcap stocks still in bubble zone, warns 360 ONE's Mayur Patel
Despite a number of smallcap stocks seeing double-digit correction from peaks in the last few days, there are many pockets in the segment which remain in bubble zone, says Mayur Patel, President and Fund Manager, Listed Equity at 360 ONE Asset.
«Elevated risks persist among smallcaps that have rallied mainly on narratives, lacking the support of earnings growth. Many of these stocks, still in a bubble zone, are yet to experience deep corrections. However, there are pockets in the smallcap space with decent risk-reward. We continue to clinically assess risk-reward in our smallcap positions and actively book profits where valuations have exceeded fundamentals,» he says.
Edited excerpts from a chat:
Your 360 ONE FlexiCap Fund has outperformed with 48% return in the last one year. Help us understand what has been your strategy and what contributed to the success.
Portfolio strategy of the 360 ONE Flexicap Fund has been purely bottom up without any market capitalisation bias. It has a good mix of large cap, mid cap and small cap stocks. We employ a high-conviction, bottom-up approach across sectors and market capitalizations. The portfolio combines long-term, high-quality, growth stocks with tactical satellite positions that aim to optimize performance and manage volatility. Our SCDV (Secular, Cyclical, Defensives, and Value Trap) framework guides portfolio construction. While the secular segment forms the core, with value traps as the least preferred, we adjust allocations between cyclicals and defensives based on the
