"We invest in best of breed companies"

Kotak Bluechip Fund has emerged as one of the promising investment options in the actively managed large-cap space and paves way in our Analysts' Choice list. We caught up with Harish Krishnan, Senior Executive Vice President and Fund Manager, Kotak Mutual Fund who has been managing their large cap fund for over eight years, about his fund and the nuances of how he manages it. Here are the edited excerpts of the conversation. You can also read the previous part of the interview. Several investors generally divide their portfolios in two-three different buckets based on themes such as secular growth stories, tactical allocation to opportunistic sectors, etc. Is there any such matrix that you follow while constructing your portfolio? We do have a basket of both secular compounders and cyclicals which varies from time to time. But as far as Kotak Bluechip Fund is considered, we broadly divide the fund into three baskets. Being a large-cap fund, 80 per cent of its assets are invested in the top 100 companies at any point of time. The way we divide the portfolio of the fund is that the first basket is primarily the Nifty basket - the top 50 companies comprising the Nifty 50 index which makes about 55-65 per cent of our portfolio. Here our focus is what not to own. Our idea is to eliminate names from within those 50 companies and over the past seven-eight years that I've managed his fund, there have been anywhere between 20- 30 names amongst the Nifty 50 that we've never invested in. This could be a function of many things. For instance, for two companies in the same business or sector, we may pick the one with slightly better pricing power or better capital efficient ratios, etc. The second basket comprises stocks in the Nifty Junior which is top 51-100 companies which makes about 20-35 per cent of the portfolio. Here our thought process is to identify 10-15 stocks which over a longer period of time, say 3 or 5 years, tend to grow faster than that of Nifty constituents and some of them will come into Nifty, over time. This is reasonably