Bandhan Small Cap Fund attracted Rs 2,191 crore in September, reaching an asset size of Rs 35,856 crore. The fund manager added 12 stocks and exited 8, while keeping nearly 13% of assets in cash. Investors should note this defensive move, which aims to provide flexibility as the fund navigates ongoing market swings.
Manish Gunwani, the fund manager at Bandhan Small Cap Fund, executed a significant portfolio reshuffle in September. Even as the broader market faced pressure, with the Nifty Smallcap 250 index falling by 3.12%, the fund continued to see money inflows, totaling Rs 2,191 crore for the month. This brought the fund's total assets to Rs 35,856 crore.
The fund manager initiated positions in 12 new companies, including Reliance Industries, JM Financial, and Viyash Scientific. At the same time, the fund exited eight assets, including Steel Strips Wheels and Torrent Pharmaceuticals. These moves reflect an active adjustment strategy in a volatile environment. Despite these changes, the fund maintains a strong focus on small-cap companies, which make up roughly 68% of its total investments.
A key point for investors is the fund's decision to hold 12.98% of its assets in cash. In mutual fund management, maintaining such a high cash balance acts as a safety buffer during market downturns. It gives the fund manager the flexibility to wait for better opportunities to buy stocks at more attractive prices. However, investors should be aware that holding significant cash can sometimes cause the fund to lag behind the market if a sudden rally occurs, as not all money is invested in rising stocks.
The fund's top 10 holdings now account for about 17.36% of the portfolio, a slight decrease from the previous month. Sobha remains the largest holding at 2.30%, followed by REC and Cholamandalam Financial Holdings. The inclusion of larger companies like Reliance Industries in a small-cap fund portfolio is a tactical move often used to provide stability when smaller stocks are facing higher volatility. While the fund has consistently outperformed its benchmark over longer periods, it recorded a 1.5% decline in September, tracking the general market trend.
Moving forward, investors should monitor the fund’s cash levels. If the market continues to be volatile, this defensive approach may remain in place. A reduction in the cash position in future reports would suggest that the manager is finding more opportunities to deploy capital back into smaller companies.