After nearly 20 months of consolidation driven by stretched valuations and geopolitical uncertainties, the small-cap universe is once again throwing up attractive investment opportunities, says Pawan Bharaddia, Co-Founder & Chief Investment Officer at Equitree Capital.In an interaction with Kshitij Anand of ETMarkets, Bharaddia explains why his firm continues to follow a private equity-style investing approach in public markets, highlights themes such as import substitution, manufacturing, infrastructure ancillaries and consumption, and shares why disciplined stock selection—not macro calls—remains the key to long-term wealth creation.
Edited Excerpts –Kshitij Anand: Well, I wanted to understand if you could just take us through the performance of the Emerging Opportunities Fund and its latest performance.Pawan Bharaddia: In terms of our performance over the last five years, we have compounded at about 21%.
If I look at it from the bottom of COVID in 2020, which is a six-year period, we have compounded at close to 40%.The last two years have obviously been a little difficult for the small-cap genre.
So, if I look at our returns over the past two years, they have been largely flattish, which, to us, has been a decent achievement because the universe in which we invest—companies with market capitalisations between ₹1,000 crore and ₹5,000 crore—remains down by close to 30% during this period.
