Are Flexi-Cap funds better than large-cap plans?

Aashish Somaiyaa: Everything in the industry today is called flexi-cap, until 2-3 years ago it was originally multi-cap. There was a time, from 2018 to 2020, where small and mid caps had a big crash, and all the multi-cap funds ended up being something like 80-90% in large caps, so obviously, the regulator was right to point out that your multi-cap funds look like large caps and don’t look like multi-caps.

Thus, the multi-cap must be composed of at least 25% small caps and at least 25% mid caps. Basically, if you call it multi-cap, it has to be all caps.

The story is that currently what the industry uses as flexi-cap was originally supposed to be multi-cap anyway.

The only thing White Oak does is launch something that was truly what multi-cap was meant to be and not get confused with BOMs because even though we call it multi-cap, again, we have at least 25% small caps. and at least 25% mid-cap companies. We don’t want all these limitations.

We want a fund that works like what multi-caps used to do, but we don’t want to end up with the minimum level, the nomenclature and those complications.

That’s the first thing. The second thing is how is it different.

Sure, there’s a stock selection process and an investment philosophy, but I’m just pointing out the two or three differences.

Usually when a new AMC comes along you have no idea how the portfolio is performing, track record, nothing at all. In the case of White Oak, it’s a little different because even though our national mutual fund is only coming now, as a group and as a house, we already manage about $5 billion. Within the group, we are one of the largest investment managers for foreign portfolio investors investing in India.

We already have a PMS (Portfolio Management Service) and an AIF (Alternative Investment Fund) that we have been managing for three years. Thus, over the past five years, White Oak has managed global funds investing in India.

Within the group, within the investment team – and Prashant who is our founder and ex-CIO of Goldman Sachs – there is a track record. There is a 32-member investment team, which is very well resourced and among the best resource teams in the industry.

The other important thing is that usually everything about fund management is presented as a matter of stock selection. Where White Oak is significantly different is that we focus very much on portfolio construction, as the portfolio is not a list of stocks.

If you see in the industry, winners spin. Why winners spin because the best of funds and the best of stock picks go haywire when the macros change. That’s why the winners keep spinning. So portfolio construction is very important and at White Oak we focus a lot on portfolio construction so that we are able to outperform the BSE 500 as consistently as possible.

In short, these are a few things one might really want to look at.

Dolores W. Simon