A quick take with Shridatta Bhandwaldar
Canara Robeco Mutual Fund recently rolled out its maiden mid-cap fund - Canara Robeco Mid Cap Fund. On the sidelines of the launch, we caught up with their head of equities, Shridatta Bhandwaldar, to get a feel of his investment philosophy and his views on the markets.
Given the current market situation, why are you launching the mid-cap fund now?
We don't give a lot of importance to timing the market, as this product is for investors willing to come in for more than three to five years. There are enough opportunities in the mid-cap segment where we can create long-term wealth for our investors.
Apart from that, a mid-cap fund was missing from our portfolio. But we, as a Canara Robeco team, think we can create long-term alpha through this product.
How do you construct a portfolio from a stock and sector point of view?
It's a simple process. There are a few components we follow while selecting a stock.
The stocks are filtered around the quality of business, the quality of management and the quality of the balance sheet.
Any new names coming into our stock universe should satisfy the above criteria. This process (also) involves no risk.
As a (fund) house, we firmly believe that businesses and companies create wealth. We don't involve ourselves in day-to-day market movements and instead focus on the underlying business.
So, the basic philosophy has been to invest in robust businesses run by competent management at a reasonable valuation.
How do you buy stocks for your flexi-cap fund, and what triggers you to sell them?
The strategy remains the same for all the equity funds at Canara Robeco.
The company should satisfy the criteria of good business, management, and balance sheet. (And) if those stocks have a good return on equity (ROE) and return on capital employed (ROCE), we invest in that stock.
So, one can say that the primary criteria are capital efficiency, good balance sheet, strong promoter and earnings growth for the next two-three years.
In terms of selling, we exit a stock if our thesis on earnings goes wrong. Sometimes, (even) if the long-term outlook of the stocks remains strong but the short-term valuation turns pricey, we reduce (our) weight and not exit the stock altogether.
Most of Canara Robeco's equity funds carry your name as the fund manager. How do you manage your time because you are the head of equity too?
There are two fund managers for each of our schemes.
(While) I manage certain funds actively, in some funds, I am the co-fund manager. To give you an example, in the scheme where I am not the primary fund manager, I am there for continuity and checks and balances purposes.
The main aim (of having two fund managers for one scheme) is to have continuity in the process and groom the next generation of fund managers.
The market is so competitive that whenever a fund manager performs, there is a risk of poaching. So, one needs continuity in the fund as we manage retail investors' money.
Given the market scenario, how have you positioned your portfolio?
Currently, the portfolio is positioned where there is a visibility of earnings upgrade cycle in sectors such as financials, industrials, consumer discretionary and auto. We are staying away from the commodity and energy sector at this juncture.
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