Betting on Fundamentals

Fund manager Sandeep Kothari shares his view point & discusses his investing style Do you replicate the benchmark closely when you construct your portfolios? We do not replicate the benchmark. In fact, 15-20 per cent of my portfolio will not comprise of benchmark stocks. We have modelled 250 companies which we have met. I use this as my stock picking universe. But it is not static. We constantly update our database as we meet new companies. If you do not use the benchmark as a portfolio construction tool, do you refer to it at all? I use the benchmark to take a look at my underweight positions of certain stocks. For instance, a stock may have prominent weightage in the benchmark but is missing in my portfolio. I will periodically go back to check if my hypothesis is still correct and I am still convinced that the stock should not be in the portfolio. So I use the benchmark more as a risk management tool. What do you keep in mind when constructing a portfolio? When we construct a portfolio, we go for bottom-up stock picking. We look at the risk-reward ratio carefully. So we not only consider the potential u