According to The Economic Times, Trust Smallcap Fund has emerged as the best performing fund in its category over the past year, delivering a 34% return as investors reassess the potential of India's broader market. The fund's success is attributed to CIO Mihir Vora's distinctive investment philosophy, which focuses on backing companies where the growth runway is longer than what the market is currently pricing in. This approach has enabled the fund to consistently outperform peers in the smallcap segment.
As reported by The Economic Times, the fund maintains a 60-70 stock portfolio with a churn ratio of 200%, reflecting Vora's dynamic approach to stock selection. The fund holds 71 stocks at the end of August, with power-capex bets contributing roughly 30-40% of total alpha. Key winning themes include CDMO, auto ancillaries, new-age companies, and capital markets. The fund's average market cap is approximately ₹15,000 crore, with most ideas concentrated in the ₹7,000-15,000 crore range within the small-cap space. Vora explains that the fund generates alpha through themes like premium consumption, financialization of savings, physical asset creation, and new-age companies. The fund's weighted earnings growth expectation is approximately 33% for the next two years, versus a benchmark/consensus of about 20%.
According to The Economic Times, individual stock weightage typically ranges from 1-1.5% minimum to 4% maximum. Vora emphasizes that the fund's gorilla investing approach focuses on terminal value prism, picking stocks where growth runways are longer than market discounting. More than 20% of the fund is allocated to mid-caps, with the largest holding at approximately ₹30,000 crore market cap. The fund's weighted earnings growth expectation is significantly higher than benchmarks across all fund categories. Vora notes that the fund hasn't found the need to reduce the portfolio size, explaining that there are 1,150-1,500 stocks above the ₹2,000 crore market cap cutoff, with about 900 stocks remaining in the relevant small-cap universe.
As reported by The Economic Times, Vora believes India's long-term growth story remains intact despite recent underperformance. He attributes the current correction to India becoming overvalued from 2020-2025 and the global AI/tech wave pulling investor attention toward US markets. However, he notes that India was the fastest-growing large economy globally even before this underperformance, while China is slowing and Europe grows at around 1%. After two years of correction, valuations have come down to comfortable levels across large-cap, mid-cap, and small-cap indices. Vora emphasizes that the fund's gorilla investing approach focuses on terminal value prism, picking stocks where growth runways are longer than market discounting, particularly in sectors like CDMO, healthcare, and capital markets. He believes the whole portfolio construction should change, with the core model being a multi-cap or flexi-cap fund to start with, before moving to small and midcap funds.
