Considering the ESG factors

Ajay Garg, fund manager, BSL Tax Relief 96 Fund discloses his views on the ELSS fund.

What is the investment strategy for the fund?
BSL Tax Relief 96 is an open ended tax saving scheme. It follows a bottom-up approach to investing. Decision of stock selection involves in-depth research and is not made simply on the basis of meeting the top level management. Our investment team also meets the staff, middle level managers, company vendors and all other stake holders to gather 360 degree view.

What is included in the portfolio and what is avoided?
The investment philosophy of the fund is to always invest in quality companies. Quality orientation involves selecting companies run by professional managements which have strong promoters, adhere to corporate governance, spend sizeable amount of revenue on R&D, predictability of earnings, companies which have strong moats. Integration of ESG (Environmental, Social & Governance) factors into investment analysis and portfolio construction is practiced on a regular basis. While investing we try to avoid buying companies that have excessive business uncertainty.

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?
The 3-year lock-in plays an important role on the investment style of the fund. This enables the fund manager to take medium to long term view on stocks of emerging quality companies and helps to invest in early stages. During times of stress in market high levels of cash is not required and the fund remains invested. So the fund takes the best advantage of staying invested in equities during times of panic helped by a 3-year lock-in period.

Any tactical miss you regret (not having, or not having enough or holding something) in your portfolio.
We are reasonably satisfied with the investments done and the same is reflected in the performance of the fund. Though few sectors have lagged due to a slowdown in the economy, however with gradual upturn expected in the economy our portfolio is well positioned to benefit from the same.

This article was originally published on December 26, 2017.