Top Smallcap Stocks Favored by Multi-Asset Allocation Funds
Multi-asset allocation funds (MAAFs) have become increasingly popular due to their ability to deliver superior returns by diversifying investments across various asset classes, including equities, gold, debt, and real estate. These hybrid mutual funds are known for their balanced approach, which helps mitigate risks and enhance returns.
MAAFs typically allocate their portfolios among equities, debt securities, commodities (such as gold and silver through ETFs), and units of real estate investment trusts (REITs) and infrastructure investment trusts (InvITs). Within this category, aggressive hybrid funds invest between 65% to 80% of their assets in equities, while the remainder is allocated to debt instruments. On the other hand, balanced advantage funds adjust their debt-equity mix based on prevailing market conditions, providing flexibility and potential for better returns.
As of July 2024, MAAF schemes had varying equity allocations, ranging from 37% to 71%. Their investments spanned across different market capitalizations, with approximately 46% of assets in large-cap stocks, 11% in mid-cap stocks, and 6% in small-cap stocks. This allocation towards mid and small-cap stocks has contributed to the enhanced performance of these funds.
Here are some of the prominent small-cap stocks that multi-asset allocation funds hold, according to portfolio data as of July 31, 2024:
- RBL Bank
- Sector: Banking
- Number of MAFs Holding: 5
- Description: A private sector bank known for its comprehensive range of banking services and strong growth prospects.
- Zensar Technologies
- Sector: IT – Software
- Number of MAFs Holding: 4
- Description: An IT services and solutions provider with a focus on digital transformation and technology services.
- Sanofi India
- Sector: Pharmaceuticals & Biotechnology
- Number of MAFs Holding: 4
- Description: A leading pharmaceutical company with a diverse portfolio of healthcare products and innovations.
- Brigade Enterprises
- Sector: Realty
- Number of MAFs Holding: 4
- Description: A prominent real estate developer known for its residential, commercial, and hospitality projects.
- Kalpataru Projects International
- Sector: Power
- Number of MAFs Holding: 4
- Description: An infrastructure company specializing in power transmission and distribution projects.
- CIE Automotive India
- Sector: Auto Components
- Number of MAFs Holding: 4
- Description: A key player in the auto components sector, providing parts and systems to the automotive industry.
- Multi Commodity Exchange Of India
- Sector: Capital Markets
- Number of MAFs Holding: 4
- Description: A leading commodity exchange facilitating trading in various commodities.
- Crompton Greaves Consumer Electricals
- Sector: Consumer Durables
- Number of MAFs Holding: 4
- Description: A major player in consumer electrical products, known for its innovative and reliable home appliances.
These stocks represent a mix of sectors and have been selected by multi-asset allocation funds for their potential to provide robust returns. By including small-cap stocks in their portfolios, these funds aim to capitalize on the growth opportunities offered by emerging companies and sectors.
