The Mutual Fund Show: Why Mahindra Manulife Small, Mid-Cap Schemes Outperformed Benchmarks

Mahindra Manulife's small and mid-cap funds ended up outperforming the Smallcap 250 and Midcap 150 indexes in 2023, just as its net asset under management reached Rs 50 lakh crore.

"I think as a fund house, what we really believe is that India is in for a nice, sweet spot on economic growth," Krishna Sanghavi, chief investment officer-equities at Mahindra Manulife Investment Management Pvt., told NDTV Profit.

Many sectors are going to participate, and they will all see "reasonably smooth" growth, though in different time frames, according to him.

"Both these schemes have given spectacular returns and it's hard to ignore toppers," said Prableen Bajpai, founder, FinFix Research and Analytics Pvt. While the small-cap fund is just a year old, it has done well and it will be interesting to watch the fund go through a down phase, she said.

"The size and the ability to get flows when your size is small and when you have a right portfolio is actually magic potion for a mid-cap and small-cap to do well," said Santosh Joseph, founder of Germinate Investor Services LLP. This combination, according to him, helped the fund outperform in 2023.

When it comes to portfolio construction, recovery, earnings, rerating of valuations and realignment of sectoral priorities are factors to be taken into consideration, according to Sanghavi.

"If you look at last 10, 15, 20 years, almost every sector has grown. Companies with a good quality management have delivered, some companies have buckled because of management quality, but not because of economy. So, as long as the management quality is right, you know we are in a sweet spot," he said.

Every large-cap company will have some small-cap company as a customer or a vendor. This means that as one grows the other will also continue to grow, Sanghavi said.

Watch the full conversation here: