While we did participate in oil & gas story, maybe we could have been more aggressive there. Thus while there will be hits and misses in the fund, our sector allocation and stock selection has contributed to very good performance for the fund, says Jayesh Shroff.
What is the investment strategy for the fund?
The fund is predominantly a large-cap fund with some allocation to mid-caps. Large-caps are defined as the top 100 companies in terms of market cap. Sector allocation calls are taken on very few sectors. Considering the size of the fund, liquidity is an important criterion for stock selection. The stock selection in the Fund is based on following philosophy: Asset owners available at attractive valuations, Good and stable businesses with very good visibility of sustaining the current business momentum and businesses where the change at margin in terms of profitability, management, business dynamics, competitive intensity, etc. is positive.
What is included in the portfolio and what is avoided?
In terms of fund strategy, we focus a lot on consistency and long term orientation of returns and therefore do not buy into stocks with short term perspective. Thus stocks which offer much better scope of earning growth over a long period of time are the ones that we buy in the Fund and avoid short term trading bets. As of now, we are overweight Industrials and oil & gas sector. We are underweight in bank, metals and consumer staples.
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?
As mentioned earlier, we believe in investment with long term orientation and the lock in helps us achieve that objective of ours. We can buy into stocks and sectors offering good returns over a long period and also allows us flexibility not to react to react to short term news and unnecessarily churn the portfolio. In terms of cash, we in any case, don't believe in keeping too much cash and therefore the lock in does not alter our cash allocation.
Any tactical miss you regret (not having, or not having enough or holding something) in your portfolio
Of course, with the benefit of hindsight, there would have been few misses that one would regret. While we did participate in oil & gas story, maybe we could have been more aggressive there. Thus while there will be hits and misses in the fund, our sector allocation and stock selection has contributed to very good performance for the fund.
This article was originally published on May 31, 2016.
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