These funds have been analysed over the past year and are presented as per the date of analysis, the latest given priority.
The name of the fund is linked to a detailed report which displays portfolio information and performance data, as well as a summary of the analyst's views on that specific fund.
ICICI Prudential Multi-Asset
- DATE OF ANALYSIS: July 2022
- ANALYST: Nehal Meshram
- ANALYST RATING: Silver
- FUND MANAGER: Sankaran Naren
- CATEGORY: Multi Asset
- MARKET-CAP EXPOSURE: The fund invests across equity, fixed income, and Gold ETF such that each have a minimum 10% allocation constantly. The other asset classes are more of a residual allocation, which are small tactical calls that are in commodity, REITs/infrastructure investment trusts, preference shares, and so on.
The fund follows a disciplined investment process and an active portfolio management approach. The equity managers follow an aggressive contrarian strategy and is willing to buy companies that are in the midst of a short-term crisis or transition but remain fundamentally sound. The team continues to dynamically manage the equity and debt portion based on market valuation and maintains the gross equity level of 65%.
Sankaran Naren and Ihab Dalwai use the counter-cyclical approach to pick sectors that have done badly but have a good long-term outlook. They evaluate sectors from a top-down perspective, favouring those with attractive fundamentals and shifting away from ones where they think valuations are stretched. They study factors such as fiscal policy, current account deficits, inflation, economic growth rate, and government policies to form top-down views.
While picking stocks, they use a bottom-up approach, seeking to identify companies with above-average profitability supported by sustainable competitive advantages. The strategy is complex, and the success of the fund depends on skilled execution; on that count, we believe Naren can make the process work
ICICI Prudential Value Discovery
- DATE OF ANALYSIS: May 2022
- ANALYST: Himanshu Srivastava
- ANALYST RATING: Silver
- FUND MANAGER: Sankaran Naren
- CATEGORY: Value
- MARKET-CAP EXPOSURE: The fund is managed in an unconstrained manner with value as an underlying theme. It is a large portfolio with a long tail. Typically, short-term tactical opportunistic calls are taken in the tail portion of the portfolio to generate additional alpha. Exposure to global stocks (capped at 17%) is based on their relative valuation compared with its Indian counterpart from the same sector.
Naren's investment approach entails scouting for stocks he believes are trading at a significant discount to their fair value. He relies on a combination of absolute and relative valuation parameters (such as P/E, P/BV, ROE, and ROCE) for picking stocks. Additionally, he looks for differentiating factors (technological prowess, cost advantage) that can give the company a sustainable edge. With the investment strategy rooted in value bets, the fund's portfolio is significantly distinct from the benchmark index and peers.
Naren is patient with his high-conviction holdings but does not shy away from trimming or exiting stocks if the valuation goes beyond his comfort level. He plies a fluid investment style here. The strategy therefore continues to be flexicap in nature.
While currently it predominantly holds large-cap stocks, Naren will not shy away from having relatively higher exposure in mid- and small caps based on valuation. However, with the fund's current size, we would like to see execution on that front before gaining further conviction here. Also, the strategy is not without risks. It can hold back the fund in rising markets when valuations are stretched and can lead to value traps. Hence, its long-term success in no small measure will depend on the manager's execution capabilities. On that count, we believe Naren is equipped to successfully ply the strategy.
ABSL Frontline Equity
- DATE OF ANALYSIS: April 2022
- ANALYST: Kavitha Krishnan
- ANALYST RATING: Gold
- FUND MANAGER: Mahesh Patil
- CATEGORY: Large Cap
- MARKET-CAP EXPOSURE: Broadly speaking, the portfolio has remained consistent with the stated strategy of large caps constituting over 80% of the portfolio. The fund typically consists of around 70-85 stocks, with the manager aiming to remain fully invested. That said, the fund can tend to take a slightly higher exposure to cash based on market expectations.
Patil studies macroeconomic factors such as the domestic interest-rate cycle, government policies, and developments in the global economy to determine the sector overweight/underweight positions. Having said that, a benchmark-aware approach leads to a portfolio that does not reflect significant over\underweights. Patil considers the fund house's investment universe and the IISL Nifty 50 Index when constructing the portfolio.
Typically, he will invest in companies that display strong earnings growth potential, while focusing on parameters such as ROE and ROCE. Patil makes use of relative valuation measures, such as price/ earnings, price/book value, and EV/EBITDA vis-a-vis comparable peers when selecting stocks. The manager isn't valuation-conscious in the strictest sense but, is willing to be flexible if he is convinced of the growth prospects. Patil has used short-term tactical plays to good effect on several occasions. He is not averse to increasing and reducing his allocation to the same stocks routinely based on price momentum and valuations. This pattern is perceptible in his long-held investments as well. Given that sector weights are aligned loosely to those of the benchmark index, the top-down approach is less significant than the bottom-up approach, but it isn't ignored.
The investment strategy is uncomplicated, but it acquires an edge owing to Patil's execution.
Mirae Asset Tax Saver
- DATE OF ANALYSIS: January 2022
- ANALYST: Nehal Meshram
- ANALYST RATING: Silver
- FUND MANAGER: Neelesh Surana
- CATEGORY: ELSS (Tax Saving)
- MARKET-CAP EXPOSURE: The fund invests across sectors and themes. A well-diversified portfolio, free from a strong bias to any particular sector and without excessive exposure to a single stock. It has traditionally held a significant stake of around 70%-80% in large companies, focusing primarily on high-growth stocks at reasonable price.
This strategy is focused on identifying stocks with a GARP framework. The investment philosophy of the fund is built on three core principles: quality businesses with stable earnings, strong management, and attractive valuation. The process includes both quantitative and qualitative stock screening with bottom-up stock-picking. The sector selection is done through a top-down approach mainly based on growth prospects. Analysts then assess stocks at the industry and company levels and focus on key drivers such as returns on capital employed, returns on equity, and EBITDA margin. Within the framework, there is a lot of emphasis on qualitative analyses like management quality and execution capabilities. These are quantified by evaluating the trailing 10-year track record, which helps in removing subjectivity. While selecting mid-cap stocks, the manager typically looks for slightly higher ROE and growth rates as compared with large-cap stocks, given these stocks come with liquidity and other risks.
There is a further focus on valuation, which becomes a key driver behind entry and exit timing. This valuation process along with quantitative factors, drive the conviction level in the stock, which helps to exclude companies where business fundamentals are not solid. Meeting with company management is vital here to gain company-specific and industry information.
Mirae Asset Emerging Bluechip
- DATE OF ANALYSIS: August 2021
- ANALYST: Nehal Meshram
- ANALYST RATING: Gold
- FUND MANAGER: Neelesh Surana
- CATEGORY: Large and Mid Cap
- MARKET-CAP EXPOSURE: The fund was historically positioned true to its mid-cap orientation and moved into the newly defined large- and mid-cap category with minor changes in the fund features. The portfolio has not changed considerably as it always maintained 30% in large caps. But ideally the fund would target to have 50-50 plus or minus 10% allocation towards mid and large cap stocks. Currently, approximately 60% of the fund's assets are in large size stocks, while 40% are in mid-cap stocks.
The investment philosophy centres around high-quality businesses with good credentials. The team combines fundamental analysis with quantitative screens, seeking firms with high earnings growth potential, strong balance sheets, and high cash flow.
The team also looks for price value gap in stock selection and considers such metrics as P/E, P/B, and EV/EBITDA. The team further filters and invests in companies that generate EBITDA/cash flows of around 100 crores. It avoids smaller companies as the idea is not to buy in at an early stage but to invest in evolving mid caps that have the potential to become large caps.
While selecting mid-cap stocks, the manager typically looks for slightly higher ROE and growth rates as compared with large-cap stocks, given these stocks come with liquidity and other risks. Within the framework, a lot of emphasis is on qualitative analysis, such as management quality and execution capabilities. These are quantified by evaluating the trailing 10-year record, which helps in removing subjectivity.
DSP Midcap
- DATE OF ANALYSIS: August 2021
- ANALYST: Himanshu Srivastava
- ANALYST RATING: Silver
- FUND MANAGER: Vinit Sambre
- CATEGORY: Mid Cap
- MARKET-CAP EXPOSURE: Mid-cap stocks hover between 70% and 80% of the portfolio. The fund manager has the liberty to invest up to 35% of the assets in large-cap stocks, which he uses to good effect.
Sambre combines absolute and relative valuation measures when picking stocks. He scouts for companies that have sustainable competitive advantages over their peers and dominant market shares in their industries.
He tracks company management decisions to see how they pan out. This is followed by meetings with the company's management. Subsequently he invests only when he is comfortable with the management's assumptions, forecasts and its capabilities.
Sambre is valuation-conscious but does not mind paying a premium for a company if it satisfies all of his investment criteria. He looks at quantitative parameters such as return on equity, return on capital employed, P/E, and price/book value vis-a-vis the intrinsic growth prospects of the company. He also invests a portion of the portfolio in companies trading well below their book values, which constitute his value picks. Here he looks for companies that are affected by poor market conditions and macro-economic scenarios rather than deteriorating fundamentals.
The top-down approach sometimes is used to increase exposure to sectors that are looking attractive on valuations and outlook. Given the bias for mid-cap stocks, Sambre prefers a buy-and-hold approach.
The execution has been noteworthy. Sambre's quality focus and investment in good-quality companies, which are typically leaders in their respective areas of operation, has helped the fund to tide through difficult times effectively.
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