The fund managers insist that a growth-bias will deliver superior outcomes in a market like ours. While multiples for this basket have been pegged back amid recent market volatility, they are adamant that business models are not broken and remain on a strong footing to weather turbulences. Yet, even as many are comfortable sitting on the ‘growth’ side of the fence, they acknowledge the need to be responsive to changing market realities and have made subtle changes to give their funds an edge.
LARGE CAP FUNDS
Shridatta Bhandwaldar
AGE: 42 YEARS
EDUCATION
BE (Mechanical), MMS (Finance)
EXPERIENCE
16 years
PROFILE
Even as value has been the flavour of the season, Shridatta Bhandwaldar has been firm on maintaining portfolio hygiene and not compromising on basic investing tenets. For Canara Robeco Bluechip Equity, his focus remains on businesses that generate healthy cash flows, are capital efficient, offer long growth runway and are run by competent management. Value, he says, should be seen in the context of incremental earnings growth and capital efficiency. It is the direction of earnings that determines if a company is a good pick, irrespective of whether it is growth or value. While he is not averse to playing value, he clearly tilts towards compounding businesses. Simply buying cheap doesn’t appeal to him as it introduces reinvestment risk. He places emphasis on getting individual stock selection within sectors right and having the ability to cut losing positions quickly when calls go wrong. This approach reflects clearly in the fund’s superior downside protection relative to its peers.
QUICK TAKE
My reading of the market scenario
Active large cap funds had a challenging period against index funds and broader market rally during 2021-22, which is expected to change in 2023 as economic activity normalises and earnings growth differential moderates. I expect large caps to fair relatively well.
How my fund is positioned
The fund is overweight in domestic cyclicals like Financials, Consumer Discretionary, Industrials. Lately we have started covering our underweight in IT.
Gaurav Misra
AGE: 52 YEARS
EDUCATION
BA (Eco Hons), MBA
EXPERIENCE
26 years
PROFILE
Taking over the reins of Mirae Asset Large Cap from Neelesh Surana in 2019, Gaurav Misra has stuck to the same path amid difficult conditions. He maintains that well run, good quality franchises will deliver steady compounding over the long run. Even though the market has not been kind to some stocks in the portfolio of late, his conviction is that these will eventually rebound. However, Misra concedes that stepping away from certain bets scoring low on ESG metrics worked against the fund amid a broader shift towards value. He retains modest active positions in sectors, but is comfortable taking deviations in individual bets. He does not shy away from having no exposure to index heavyweights. Even as operating in the large cap space has become difficult, he is adamant that if India continues to grow, it will happen with participation from large companies and sectors. These will remain relevant for wealth creation.
QUICK TAKE
My reading of the market
If we believe that the system will grow at +10% CAGR in nominal terms for the next five years and for the aspiration we have for the size of the economy, it is inevitable that large firms will be part of this story.
How my fund is positioned
My fund is sectorally well diversified to capture the broad domestic growth dynamics of consumption and investment. It has good sectoral presence in industries where India has a global competitive advantage i.e. IT, pharma/CRAMS and specialty chemicals.
Shreyash Devalkar
AGE: 43 YEARS
EDUCATION
Bachelor in Chemical Engineering & MMS
EXPERIENCE
17 years
PROFILE
Shreyash Devalkar’s strict quality-centric approach has come under pressure in recent times but he is prepared to ride out the rough weather. For Axis Bluechip, Devalkar initially gravitated away from his preferred B2C-heavy stance towards B2B centric firms during the lockdown. But as interest rate hikes kicked in, deflating multiples of growth stocks, his portfolio got punished. Devalkar persists with a highly compact portfolio, setting the fund apart from peers in terms of deviation from index. Unlike fund peers, Devalkar leans more towards mega largecaps, with negligible presence in mid caps. This is owing to his preference for retail consumption theme, where larger companies dominate. He has also occasionally used cash as a shield against market volatility or for when its style goes out of favour, most recently amid last year’s market upheavals.
QUICK TAKE
My reading of the market
Since inflation is showing signs of abating, interest rates may cool off sooner than later, though it may take time considering sticky inflation in the West. In lower interest scenario, consumption growth may pick up, giving fillip to large cap category.
How my fund is positioned
Axis Bluechip Fund is overweight on financial services along with consumption oriented industries. We are broadly neutral on export segments like IT.
Swati Kulkarni
AGE: 56 YEARS
EDUCATION
B Com. MFM (NMIMS), CFA, CAIIB-I
EXPERIENCE
29 years
PROFILE
After an illustrious stint, long serving fund manager of UTI Mastershare, Swati Kulkarni, handed over the baton towards the end of last year. Her 16 years at the helm of the flagship scheme put it on a firm footing, and she has ensured a strong platform for the incoming fund manager to build on. Throughout her journey, Kulkarni stuck to a safetyfirst stance, guided by the primacy of cash flows over other metrics. The focus remained on identifying and sticking with competitive franchises. She avoided a tilt towards either extremes of growth and value spectrum. She held her nerve through the tough phases like last year when market preferences shifted. This discipline held the fund in good stead over the long run, lending it a consistently healthy track record even if it did not set the performance charts on fire.
QUICK TAKE
My reading of the market
Valuations for large cap indices is above historical averages though not very expensive after the recent correction. Consensus earnings growth expectations for 2023-24 may be at a risk of downgrades given sluggish global growth and tighter liquidity.
What investors should do now
Stick to the desired asset allocation to achieve long term financial objectives. SIP is the hygiene of personal finance and must go on but the incremental lump sum investment in equity may be staggered. Hybrid /asset allocation funds can be considered by those who prefer lower volatility in NAV.
Harish Krishnan
AGE: 42 YEARS
EDUCATION
CFA, PGDBM, B. Tech (Electronics & Communications)
EXPERIENCE
17 years
PROFILE
A combination of three factors have helped Harish Krishnan achieve healthy outcomes in Kotak Bluechip. First is the focus on elimination within the Nifty basket, weeding out companies with reducing relevance to profit pools. Second, identifying businesses with growth edge and longevity within the Nifty Junior basket. Third, good calls within the 15% allocation towards opportunistic bets in mid caps. This framework has lent the portfolio a faster growth profile over the benchmark and ability to withstand the cyclical push-back from value. Big sectoral calls in auto and industrials also aided performance. Krishnan does admit to having to course-correct in a portion of the fund’s Nifty junior positions.
QUICK TAKE
My reading of the market
After a strong run from Covid lows, markets have consolidated Valuations have moderated to longer term averages. Going into an election year, there is likely to be elevated volatility. From a medium term perspective, we are constructive on the markets, and our fund is positioned for improving medium term earnings outlook.
How my fund is positioned
We are positive on two broad themes – margin recovery and energy consumers. We are invested in “best-of-breed” companies, with overweights in auto, industrials, home building, gas utilities, pharma, and underweight in financials (especially non-banks), global commodities and energy.
