According to Mint, small-cap funds continue to attract strong investor inflows, but valuations have risen considerably over the past 12 to 18 months with sentiment turning sharply positive following Q1 earnings. Anupam Tiwari, head of equities at Groww AMC, explains that investor interest in small caps was muted when Groww advocated the segment more than a year ago, but sentiment has since shifted significantly. He notes that retail behaviour often follows past performance, similar to the recent buying frenzy in gold funds, with investors now moving aggressively into small caps because of their recent returns. However, Groww cautions that small-caps remain a highly volatile investment category and investors should maintain a long-term horizon of at least eight to 10 years to potentially generate sustainable returns and healthy CAGR.
As reported by Mint, Groww has launched passive thematic products around EVs, defence and healthcare targeting structural growth areas in the Indian economy. Tiwari emphasizes that these niche products are primarily designed for knowledgeable investors who understand industry cycles and risk-reward dynamics. For general retail investors, total exposure to thematic or sectoral funds should be strictly capped at 5% to 10% of their overall portfolio due to high volatility and cyclicality inherent in these themes.
According to Mint, Groww follows a QGAR investment approach focusing on quality, growth, and reasonable valuations. Tiwari explains that the fund house views the market as a multi-factor, complex and evolving system, where standard textbook formulas often break down. Groww evaluates business cycles, management quality and growth visibility over a 12-to-24-month period while maintaining sectoral diversification to help manage portfolio risks. The stock-selection framework is built around the QGAR philosophy, focusing on quality, growth and reasonable valuations, with the fund house evaluating whether underlying growth can remain durable over two, five or seven years.
As reported by Mint, Groww is taking calculated growth exposure across four key sectors with long-term expansion potential. The consumption sector benefits from rising per capita income and changing spending patterns among younger consumers, creating opportunities across the broader consumption ecosystem. Manufacturing activity has regained momentum following tariff adjustments in important export markets such as the US, with niche Indian exporters having considerable room to expand despite India's inability to match China in mass-scale production. The fund house remains optimistic about capital markets, NBFCs and other non-lending financial businesses, with traditional banks becoming more attractive after valuation corrections and improving corporate credit growth. Additionally, Groww expects multi-year expansion in power transmission and distribution both in India and international markets.
According to Mint, Groww monitors three primary global variables affecting portfolio positioning. The fund house keeps close watch on US interest rates and debt levels, as high interest rates make it harder for capital-deficient emerging markets like India to attract global foreign capital. Additionally, China's manufacturing overcapacity has led to global price dumping, driving up Indian imports, though recent currency shifts of around 15% rupee depreciation relative to the Chinese yuan help encourage import substitution.
