Interview with Neelesh Surana, CIO at Mirae Asset Investment Managers

Neelesh Surana, CIO at Mirae Asset Investment Managers, has been instrumental in shaping the investment philosophy of the AMC and building the credibility that it claims today. He currently manages Mirae Asset Large & Midcap Fund and Mirae Asset ELSS Tax Saver Fund. While both have delivered extraordinary returns for long-term investors, the near term has been rather pale. Here, Surana sheds light on what has contributed to this anomaly, how he plans to make a turnaround in funds' performance and his views on PSUs and new-age companies. How would you describe your investment philosophy? Are there any specific stocks or market situations that particularly grab your attention? The investment philosophy is divided into two parts: stock selection and portfolio construction. The ultimate goal is to beat benchmarks. Firstly, I would say that we believe in picking up good-quality businesses and holding them for long periods of time. There are some subcomponents that need to be analysed or filtered related to business and management analysis. And lastly, the price that you're paying. So, on the business front, it is essentially about equity growth, wherein we have some basic filters that the business should have. For example, double-digit (earnings) growth - the higher, the better. Additionally, value-accretive growth should meet the return on capital employed, with an internal benchmark of around 14-15 per cent. The emphasis is given in terms of management analysis, both on the basic hygiene part and in terms of forensic analysis. But more importantly, I think we put a lot of emphasis on leadership aspects, which include corporate governance and capital allocation. Lastly, in terms of stock selection, we have well-defined models, and we assign a value based on long-term discounted cash flow (DCF). So, the idea is to buy stocks at a discount. The price-value gap has to be there, and that's a long answer. However, diversification is important in stock selection and portfolio construction. And as I'd mentioned, the mandate is to outperform the benchmark. So, no sector, stock or style should deviate significantly from the underlying constituents of the benchmark. All this put together, I would say the idea is to focu