Belief in India Story | Value Research Nobutaka Kitajima, Equity CIO, LIC Nomura MF, says India can achieve growth at a good rate over the next decade...

Belief in India Story

Nobutaka Kitajima, Equity CIO, LIC Nomura MF, says India can achieve growth at a good rate over the next decade...

Nobutaka Kitajima, Equity CIO of LIC Nomura Mutual Fund, believes that growth can be achieved at a good rate over the next decade in India and shares with Chirag Madia changes in fund management that he has incorporated

What has been your experience in managing Indian equities over the past six months?
Prior to this stint, I was managing global equity funds in the European and North American markets. So, coming to a growth country like India was a big change and paradigm shift for me. Managing global equity involves multiple currencies and multiple countries. In comparison, I feel it’s a lot simpler now, as I have to look at only the Indian markets. The reason why I took this job was only because I believe in the India growth story. I came to India in August 2012 and that was the time the government was announcing economic measures and encouraging investments. This only confirmed my belief that India growth story is intact and has the potential to grow.

How different is fund management in India?
The basic structure remains same in any part of the world, but, constant regulatory changes and delay in decisions is little worrisome in India’s case. Apart from that, India is not an export-oriented market and commodities are not decontrolled, which is yet another difference compared to other Asian markets.

What investment strategy do you follow?
After managing money for almost two decades the style of investment does not change. I am a firm believer in bottom-up approach to stock investing and I follow the same principle in India. However, I follow top-down thinking as a risk control measure. When selecting a particular stock, I don’t look for only growth or value. Depending on the mandate, it can be a mix of growth and value.

Have you changed the fund management process at LIC MF? What have you done?
In terms of change in the process on the fund management side, it was done by my predecessor. My job is to implement that process. We have strengthened our research team. We have also strengthened our systems, which makes us now look like a complete team. After I came on board, we have hired a few high-quality people which will bring in strong expertise and might have a positive impact on the funds in the future. Speaking about fund portfolios, in the past few months, we have consolidated our portfolio which were not taking an aggressive positioning and consolidated them. This is a shift from the portfolio being too diversified, before I joined. Going forward, we want to invest only in high-quality companies and stick to them for longer duration.

How will you compare the Indian equity market to the rest of the Asian region? And how is it in comparison to a developed market?
If we speak about the rest of the Asian region, I feel India stands at the same place where Philippines or Indonesia stood around a decade ago. At that time, these countries experienced chaotic regulations and unstable political regime, only for the growth to pick up later. In their case, markets were re-rated acknowledging the reforms, resulting in growth. China is growing faster compared to other markets, but I don’t think they will grow as fast as they did earlier. They are also unlikely to get more money flows in the future.

I see a similar trend in India, where growth can be achieved at a good rate in the next decade. If one looks at the current valuations, India is looking attractive compared to other Asian counterparts. The stage of economic development in India is quite different compared to other Asian markets as Indian economy is on a growth path. As for developed economies, the interest rates, inflation rates, growth potential are quite different there compared to what we see in India.

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