'Our portfolio's quality will help us outperform corrections and crashes'

How is your team viewing the current market valuations and preparing for possible corrections?

The current market reminds me of my favourite childhood movie, Amar Akbar Anthony. There was a song, "Anhoni ko honi kar de, honi ko anhoni. Ek jagah pe jama ho teno, Amar Akbar Anthony." The market is witnessing an unusual rally based on fundamentals, sentiment and liquidity. There are stocks like the character of Amar Bhai, an honest, upright officer - companies with good fundamentals and reasonable valuations for a long-term investor. There are also Anthony Bhai stocks, which have good fundamentals but expensive valuations. We believe this is the time to be with Amar Bhai stocks.

At Kotak Mahindra Mutual Fund, our fund management team is focused on quality over momentum, reasonable valuations over expensive valuations and high-floating stock counters over low-floating stock counters. Corrections and crashes are part of the market. We are relative return investors, i.e. trying to outperform benchmark indices like Nifty. Our portfolio's quality and reasonable valuation tilt will help us outperform corrections and crashes.

Are index and factor-based passive funds a fad or a lasting investment strategy?

They will become an important part of the investment landscape. Globally, passive funds are a large part of the investment landscape, and India will be no different.

Will AI impact your business? How and why?

In a simple sense, a person wearing an Iron Man suit will likely win against someone without one. Similarly, an asset management team leveraging AI will likely do better than the one not using AI. AI is pervasive and will impact all aspects of our business. From customer service to investment management, AI will profoundly impact how we do business.

Rapid-fire questions

• If your fund house had a superpower for investors, what would it be?
  We will make Fevicol ka Bond with our investors through financial awareness.
• The biggest mutual fund myth you'd debunk.
  SIP is a systematic investment plan. It is sab iccha ki purti.
• An unconventional asset class you'd add to your portfolio.
  Hybrids with a part fixed-income risk-return and part equity risk-return payoff.
• A Bollywood movie that best represents the mutual fund industry today.
  Lagaan for showing how the local team defeated the foreigners. And Golmaal. Part of the market can be described as a Golmaal. Unlike the entertaining film, which ended well, real life will be different. It will be a tragic end for the last person holding the stock.

This article was originally published on October 29, 2024.