All you need to know about White Oak Capital's new large and mid-cap fund

WhiteOak Capital Large & Mid Cap Fund will predominantly invest in Large and Mid Cap stocks with an aim to create a factor diversified balanced portfolio with high active share

Investment advisory and management firm WhiteOak Capital on Wednesday launched a large and mid-cap open-ended equity fund as it is bullish on the growth prospects of these stocks.

The new fund offer (NFO), which is called WhiteOak Capital Large & Mid Cap Fund,  is open from December 1 to December 15, 2023. 

According to the scheme document, the primary investment objective of the scheme is to generate long-term capital appreciation by investing in and managing a diversified portfolio of equity and equity-related instruments of large and mid-cap companies. 

"The large cap stocks may give a lower return in the near term compared to others but it provides stability to a portfolio when the market is shifted. On the flip side, mid-cap is the growth part of the fund, said Ramesh Mantri, CIO, WhiteOak Capital AMC.

Portfolio construction 

Under normal circumstances, the scheme aims to maintain a roughly equal allocation to large-cap and mid-cap stocks operating between 40 per cent to 60 per cent range in each and at the outer side, it may opportunistically own a few small-cap stocks not exceeding 10 per cent under normal circumstances. 

 

The maximum exposure to equity derivatives and debt derivatives shall not exceed 50 per cent of the net assets of equity component and debt component, respectively. This scheme also seeks to invest  $50 million in foreign securities and $20 million in overseas ETFs. 

Why large-and mid-cap stocks? 

“Large and Mid-Cap stocks are an excellent category for growth-oriented investors because they get the best of both worlds, the stability of large caps akin to a marathon runner and the agility of mid-cap akin to a sprinter,” said Aashish P Somaiyaa, CEO, WhiteOak Capital AMC.

From a market-cap perspective across different market cycles, large-cap indices have performed relatively well during falling, flat, and narrow markets. 

 

The company noted that during the last few years of uncertainties like demonetisation, GST implementation, NBFC crisis, and Covid etc, large-cap companies’ share in total capital expenditure has gone up substantially compared to mid-cap or small-cap stocks.

The company also noted that mid-cap indices performed strongly during rising market scenarios. According to the AMC, between December 2020 and September 2023, the small and mid-sized companies have risen by an average of 31.2 per cent.

"Large-cap companies get about a quarter of their revenue from sources outside of India, providing balanced exposure to the Indian and global economy. On the other hand, mid-cap stocks provide diverse exposure to a variety of sectors – both established and emerging and being under-researched, and provide opportunities for growth and alpha creation in the portfolio," said Mantri.
 

“We have been very explicit in saying that it is time to relocate assets from small caps to large cap and mid-cap. Mid-cap because it has a strong aligned growth and the rally has been very pronounced in that space. The concern is largely in small-cap space,” Somaiyaa told Business Standard. 

According to the WhiteOak Capital management: 

1. The offers a balanced portfolio construction taking in both pro-cyclical and counter-cyclical stocks to help reduce macroeconomic shocks. 

2. The fund is actively management by a large investment team with over 32 people. 

3. The portfolio construction follows no sectoral or style bias to achieve goals of diversification and risk mitigation. 

This scheme is suitable for investors who are seeking long-term capital growth and want to invest in equity and equity-related securities of banking and financial services companies.

According to the riskometer, the risk associated with the mutual fund is “very high.”

Investment can be done under the scheme with a minimum investment of Rs 500 per plan/option. 

The fund will be managed by Ramesh Mantri (Equity), Trupti Agrawal (Assistant Fund Manager), Piyush Baranwal (Debt) and Shariq Merchant (Overseas Investments).