4 days ago
Emkay Investment Managers launches SMID Cap Growth Engine Fund
Emkay Investment Managers
Limited (EIML) has announced the launch of the
Emkay SMID Cap Growth Engine Fund
. EIML aims to raise Rs 500 crore to Rs 1,000 crore from this latest fund during FY26.
The product seeks to achieve
long-term capital appreciation
by investing primarily in small-cap and mid-cap securities. Under this PMS and AIF offering, investments are made in
equities and equity-related instruments
, with a balanced and well-diversified portfolio constructed based on fundamental research.
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The strategy follows a bottom-up stock-picking approach, supported by extensive fundamental analysis, including an in-depth study of the business, management, and valuation.
The fund will be benchmarked against the S&P BSE 500 TRI, and investors are advised to have an investment horizon of two to three years. It will be managed by
Manish Sonthalia
and Kashyap Javeri.
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Small & Mid Cap (SMID) investing offers broader exposure to India's growth story through innovation, digitalisation, capex, and consumption, providing more opportunities for alpha generation compared to large caps. These sectors are expected to benefit from macro tailwinds such as easing inflation, declining interest rates, rising household income, and liquidity measures, all of which support market revival and higher growth.
Given that SMID companies often rely more on borrowings for operations and expansion, they are typically more sensitive to interest rate cycles, positioning them to recover faster and potentially outperform in an environment of moderating inflation and falling rates.
According to EIML, mid- and small-cap companies are poised for positive growth over the next 3–5 years, making them a compelling investment opportunity. The firm also highlights that mid- and small-cap stocks have delivered robust returns over the past five years. Furthermore, EIML notes that the current macroeconomic environment and supportive valuations offer an attractive entry point for SMID investments—especially after the recent market correction.
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As of March 2025, small-cap and mid-cap
mutual funds
(MFs) together account for over 30% of total equity flows, a sharp increase from just 5% a year ago. The dual support from foreign institutional investors (FIIs) and mutual funds makes this rally far more sustainable. Strengthening flows into SMID segments indicate that select opportunities in small- and mid-cap stocks could outperform over the medium term.
'SMID offers a compelling mix of growth potential, valuation comfort, and supportive macro trends, making it a strong candidate for investment. The fund follows a focused bottom-up stock-picking approach, backed by in-depth fundamental research and our proprietary E-Qual Framework—arguably the only framework of its kind in India—to objectively score management quality,' said Manish Sonthalia, Director & Chief Investment Officer, Emkay Investment Managers.
