Small-caps that have caught fund managers' fancy

Typically, mutual funds (MF) restrict their investments to large and liquid names. However, the excess cash flush, high incremental flows and quest for higher returns have made fund managers look at unusual names. Many fund managers have expanded their research horizon and are seen investing in several lesser-known companies. Some of the first-time entrants to MF portfolios include Aksharchem, Dishman Carbogen Amcis, ABC Bearings, Munjal Showa and Automobile Corporation of Goa. Most of these stocks are of small-cap companies, which the fund managers believe might have the potential to grow. Aksharchem, in particular, needs special attention, as the company has seen the highest investment of nearly Rs 33 crore by L&T Mutual Fund. The fund house purchased over 400,000 shares of the company. Several equity MF schemes have gained in size over the past three years. Fund managers understand that to generate benchmark-beating returns, they have no other option but to look beyond the existing bunch of stocks, which are owned by many.