Small caps’ catch up trade has played out well over last 3months. Going forward, large, mid and small caps look more or less equally attractive. However, as the rate cut cycle begins and as raw material prices continue to soften, mid and small caps can see bigger earnings benefits and can therefore outperform large caps.
Residual 25% of the new Canara Robeco Multicap Fund likely to be deployed more in mid caps and in larger small caps. Idea is to look for greater alpha without going too low in cap size.
Structure of this fund – across all cap sizes – lends itself to more bottom-up stock picking in each segment, which plays into Canara Robeco’s strengths in research and stock picking.
Industrials, consumer discretionary and manufacturing are three themes Shridatta continues to be bullish on.
He is very cautious on commodities – the world is slowing down and China’s reopening has been a disappointment, which means more downward pressure on commodity prices.
IT has been a drag and while large cap IT stocks are now at reasonable levels, they are not yet strong buys. Shridatta remains circumspect on midcap IT stocks.