"In small caps, you must think long term"

The mid and small-cap stocks have been in the limelight this year. We spoke with Resham Jain, fund manager at DSP Mutual Fund, who co-manages DSP Midcap Fund and DSP Small Cap Fund. In this interview, he shares his stock-picking strategy and more. Here is the edited transcript. 1) What got you interested in equity investing? I have donned many caps in my career in the last 15 years. I started in academics; I used to teach. After that, I moved to corporate finance. I worked for a manufacturing company and looked at various aspects of finance there. From there, I moved to sales (B&K Securities), tracking several sectors. Since the last eight years, I have been on the fund management side, tracking several sectors along with the fund responsibilities as well. 2) What is your role in co-managing both funds with other managers? How do you divide the work? The DSP Small Cap Fund was established in 2007-08 and has been in operation for nearly 17 years, with the fund's size increasing over the period. The AUM was near Rs 3,000 crore a decade ago; now, it's close to Rs 13,000 crore. As the fund grows in size, our stock universe increases, prompting us to bring in more personnel to share the responsibility. At the portfolio level, we all sit down and discuss what has to be done in the fund. But then, we may delve deeper into specific areas of mutual interest. I look at specific industries in greater depth in the small-cap fund, such as chemicals, agro, and some retailing companies. Abhisek (Ghosh) delves deeper into other areas, such as construction materials, logistics, and more. Vinit (Sambre) is a seasoned fund manager with much more experience. He is, therefore, involved in all our overall decisions. Having said that, it's a collaborative decision; we reach a consensus, and then we make our decision. So, in essence, Vinit makes the final decision on whether a certain stock should remain in the portfolio or be removed from it. 3) What are the key constraints while managing mid and small-cap funds? I believe there are a few significant alterations or limits, which are significant. Let us first assume that new sectors are developing with no history. For example, there were once just a few companies with a very limited history in the chemical sector. However, an