Vetri Subramaniam, fund manager, Invesco India Tax Plan, talks about the elements of their investment strategy that constitutes maintaining a diversified portfolio and a patient approach.
What is the investment strategy for the fund?
Investors who invest in this fund are committed for 3 years. So our approach is be patient with the companies that we invest in and we invest a high proportion in young companies where we can benefit from their growth. The portfolio has a high proportion of midcaps in comparison to its benchmark but in absolute terms it is equally balanced between large-caps and mid-caps. The portfolio is always well diversified.
What is included in the portfolio and what is avoided?
The fund holds some our best large-cap and mid-cap ideas. We prefer quality businesses with healthy growth prospects and at reasonable valuations.
We do not take tactical positions in this fund-either at a sector or stock level. Neither do we try to manage asset allocation tactically. We maintain the equity allocation at around 95%.
Tax planning funds have a different redemption pattern given the three year lock-in compared to the diversified equity schemes. How much does this factor play a role in fund management and investment? Does it have any bearing on cash allocation?
This is covered in previous 2 replies
What will you attribute the relative consistent performance of your fund in recent years?
The elements of our investment strategy - maintaining a diversified portfolio; a balance of midcaps and large caps with a patient approach and avoiding tactical trades have all contributed to the performance of the fund. We have experienced periods where we have done poorly relative to the peer group but these have been relatively short and not deviating from our chosen approach has worked for us when we evaluate performance over slightly longer periods of time. Stock selection has been the dominant contributor to our Alpha generation- this is consistent with the trends we have experience across our entire range of equity funds.
Any tactical miss you regret (not having, or not having enough or holding something) in your portfolio?
Since we don't take tactical positions-no regrets on that front. But in the last 1 year our stock picking in Healthcare was slightly disappointing for this fund.
Please click here to read the analysis of this fund.
This article was originally published on June 13, 2016.
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