• Maheswaran Hariharan

AssetPlus NFO Review: WhiteOak Capital Flexi Cap Fund

Updated: Oct 26

WhiteOak Capital AMC has launched an NFO, which is now open for subscription from July 12th, 2022, and closes on July 26th, 2022.


Investment Objective:


To generate wealth over the long term, suitable for investors having a moderate risk appetite who are comfortable with volatility in the short term.


Investment Strategy:


As the name suggests, the fund will invest in a completely flexible manner across all areas of the market based on opportunities, namely Large, Mid and Small cap stocks that are winners in their respective sectors. The fund follows an approach that emphasizes investing in great quality businesses at attractive valuations. The fund will invest at least 65% of its portfolio in Equity and Equity oriented investments, and the remaining 35% can be in any other Equity market cap/Debt Instruments or Cash. The focus is to create returns that can outperform the benchmark by active fund management with no restrictions on any specific market size/cap.


Fund Manager: Ramesh Mantri and Piyush Baranwal

Benchmark: S&P BSE 500 TRI

Minimum Lumpsum Investment Amount: Rs 500

Minimum SIP Investment Amount: Rs 500


Fund Management Process:

  1. The fund follows active management with the expectation to generate alpha over the long term.

  2. The investment universe is majorly from S&P BSE 500.

  3. The portfolio is constructed through the following process:

  • Stocks are selected based on a bottom-up approach.

  • The focus is more on stock-specific rather than overall market-specific.

  • Identify and invest in great businesses which are available at attractive valuations.

  • Include Pro-cyclical as well as Counter-cyclical stocks to reduce macro shocks.

4. No specific bias to any sector overall, but preference will be towards company-specific growth rather than industry.

5. No specific bias to market capitalization and will be periodically revised based on opportunities.

6. No fixed preference for the Value/Growth style of investing.


Opportunity:


The markets inherently are highly volatile, and every single sector or segment of the market performs differently in different time frames. A flexi-cap strategy attempts to make the most of all the opportunities present in the market without having any bias or preference for a specific segment/size/sector.



Annualized returns of various major indices. Source: WhiteOak Capital AMC

Diversifying across all the market capitalizations helps in not just providing consistent returns over the longer time frame and provides minimal scope for sustained periods of underperformance as opposed to a traditional market-cap based equity mutual fund which is wholly mandated to its respective category.


Based on our analysis, we have observed the following pros and cons:


Pros:

  1. Completely Market Capitalization Agnostic

  2. Relatively more stable and consistent with lower drawdowns

  3. Mitigates risk by avoiding concentration in any sector/stock/segment of the market

  4. No limitations or mandated restrictions towards any sector or style of investing

  5. Dynamic approach of investing with flexibility to shift across market-caps based on opportunities as there are no restrictions

Cons:

  1. Investment universe is vast, making it susceptible to over diversification

  2. New fund house with no particular track record in the mutual fund space

  3. No specialization in any specific market segment

History has repeatedly reminded us that no single category can be the best at all points; hence, a Flexi-Cap approach would be ideal for a moderate-risk investor to get the best of all flavors of the market to create sustainable wealth in the long run.

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