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The Small Cap Core Strategy

Reap the budding jewels!


Objective

The objective of Small Cap Core Portfolio is to research and recommend companies wherein the clients can enjoy the benefit of potential growth offered by small-cap stocks which are likely to become tomorrow’s mid-cap stocks.

These companies are either at their nascent or developing stage and are under-researched and comparatively unexplored. Although relatively volatile in the short run, small-cap companies have immense potential to deliver higher growth in the long-term horizon.

Why Small Cap Core Portfolio?

Small-cap companies with healthy corporate earnings, robust outlook and strong management are considered to be attractive stocks as they are more likely to grow exponentially. However, it is equally challenging to choose the right combination of Small caps at just the right valuations. Choosing Quality small caps involves an in-depth study of valuations while making sure that the small-cap companies have retained their fundamental strength despite the volatility in the markets at any given point.

StockAxis uses its incisive fundamental research to spot strong small-cap stocks of companies in growing sectors run by honest management and with sound business models.

Small Cap Core Strategy - Key Traits

Stocks Selection
:
Bottom up approach, focus towards business with scalability, and significant opportunity for re-rating of stocks with an aim to deliver superior returns in the long term.
Tax efficiency. Most capital gains will be long-term.
Tax Efficiency
:
Most capital gains will be long-term.
Possible Risk
:
Business model does not scale up, liquidity risk and high volatility in Returns Regular Rebalancing. Stocks with deteriorating factors will be advised to be sold and / or replaced with stronger positions.
Diversification
:
10 – 15 positions in the portfolio.
Churn
:
Low
Recommended Investment Tenure
:
3 years to get optimum return
Value added services
:
  • Access to Research Analysts
  • Recommendations via SMS, email & mobile app notifications at real-time
  • Research Reports & Regular Updates
  • A Dedicated Relationship Manager
  • Access to the Recommended Portfolio in Web Login and Mobile App

FAQs

According to SEBI’s Market Cap categorization, the top 100 companies in terms of market capitalisation are considered to be large caps. Further 101st to 250th companies are considered to be Mid-caps and companies ranked from 251st onwards are considered to be small caps.

This strategy takes a bottom-up and valuation-driven approach that seeks to identify and advise in small-cap stocks that are attractively valued versus their long-term fundamentals.

Small caps can be risky if you invest without proper research and not factor in the valuations of the company, However, StockAxis ensures that you invest at opportune levels and in fundamentally strong companies. We also maintain a close track on these companies so that we can make sure that your risk is balanced.

Small-cap stocks can be volatile in the short run, but these quality companies have the potential to deliver higher growth in the long term trajectory. In order to gain optimum returns, we recommend an investment period of 2 – 3 years.

No. With Small Cap Core Portfolio, all you have to do is invest and rest. We will maintain a constant track of your portfolio and notify you if or when any changes in the positions are required. However, you can maintain a track on your investments if you desire.

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