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Focusing on BMV

"We tend to avoid companies which do not have a high level of corporate governance and weak moat," says Shreyash Devalkar of BNP Paribas Equity Fund

Our Q & A session with Shreyash Devalkar, fund manager, BNP Paribas Equity Fund

What is the investment strategy of your fund? (Including internal rules on investment universe, capitalization orientation and maximum cash allocation)
We believe that, 'it is companies that create wealth, not markets'. The companies are thoroughly researched internally by our experienced research team with an aim of ensuring that only the most suitable companies make it to our portfolio. Our investment philosophy of focusing on BMV (Business - Management - Valuations) framework for selection of companies in portfolio, has helped in consistent performance. We do not take cash calls, we book profit when we see business environment adversely turning for the company and remain in cash till we get next best idea. BNP Paribas Equity fund has large cap orientation, we define large cap as the market cap of 100th largest company by market cap in BSE 500.

What are the essential attributes for the stocks to be in our portfolio?
Various investment ideas are filtered through our BMV (Business - Management - Valuations) framework of company selection before adding it to investment universe. The Business fundamentals are analyzed based on different parameters like secular trends, uniqueness of business model, moat of business etc. Management's execution capability is key in delivering sustained returns within the realm of industry dynamics and corporate governance are important parameters. Growth At Reasonable Price (GARP) is the philosophy that is followed while assessing valuations.

What kind of stocks never enter your portfolio?
We tend to avoid companies which do not have a high level of corporate governance and weak moat.

What will you attribute the relatively consistent performance of your fund in recent years?
Our investment team is highly experienced in the market with understanding across sectors, the knowledge has helped in consistency. In addition, as discussed earlier, our investment philosophy of focusing on BMV (Business - Management - Valuations) framework for selection of companies in portfolio, has also helped in performance of the scheme. Over long term companies having higher earnings growth tend to outperform. Hence focus has always been on earning growth.

Any tactical miss you regret (not having, or not having enough or holding something) in your portfolio?
We always strive to follow our investment process as highlighted earlier, in its true spirit. Hence, we do not regret not owning stocks which have gone up, which do not fit in our investment philosophy. While in case of any stock which we are holding is not performing, we continuously focus on the continuity of moat and growth of the company and would continue to own as long as it fits in our philosophy.