Carnelian Mutual Fund opened its first equity scheme on October 16 with a clear preference for the small-cap category.
Carnelian Mutual Fund is betting that its research-led investment approach can differentiate its mutual fund business in a crowded market, with CEO Rajkumar Dhiman saying the focus will be on generating alpha rather than gathering assets.
The choice of small-caps reflects Carnelian's view that the segment offers a wider pool of businesses linked to India's domestic growth, along with opportunities for stock pickers in a market that receives less research coverage than large-caps.
But the investment case rests on identifying companies where earnings potential is not already fully reflected in valuations, rather than buying the segment indiscriminately.
Carnelian's broader research points to a valuation distinction that it believes is important for investors comparing companies across market-cap segments. Domestic, non-financial large-cap companies traded at a median 42 times estimated FY27 earnings, compared with 30 times for small-caps. Its analysis covered 1,594 listed companies.