Small Cap Fund
Tata Small Cap Fund focuses on buying businesses which can grow over the next 3-4 years along with focusing on strong balance sheet and available at reasonable valuations. Given the high volatility and uncertainty associated with small caps, its imperative to make the right picks. Since inception, Tata Small Cap Fund has been able to reduce capital drawdowns vis-à-vis the benchmark index. The fund aims to deliver risk adjusted returns focussing on stocks available at reasonable valuations in this segment.
Investment Philosophy
- Philosophy: Our investment philosophy is to identify companies which can grow in terms of profitability and cash flows with strong balance sheets where business can surprise the markets over a period of time in terms of delivery of earnings which in turn can lead to rerating of valuations.
- Our primary criteria for stock selection remains ‘Growth at reasonable price”. We are looking for businesses which can grow earnings at a strong pace with free cash generation and available at a reasonable price.
Portfolio Positioning and Construction
- Compounders – Essentials characterised of stock picked as compounders are growth, low debt and high free cash flow.
- Low Churn – Buy and hold onto compounding stocks over the medium to long term.
- Bottom Up – Business fundamentals and valuations to be primary driver of stock selection.
- Avoid – Global Commodity companies
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