Even the most seasoned professionals at asset management companies don’t profess to make sense of what has transpired in the past 18-odd months. However, these equity market mavens have drawn on years of experience and kept calm in the face of the storm. In this year’s ET Wealth-Morningstar Fund Manager Rankings, we shine the spotlight on a few battle-hardened commanders who have skillfully negotiated the onslaught. These individuals rank among the top money managers for helping investors build wealth with a firm eye on risk. Our study looks at the five-year track record of equity schemes and identifies the best performers across three distinct categories on the basis of risk-adjusted returns.
A closer look at the handiwork of these achievers reveals a few common threads. Sticking to core investing philosophy at all times comes front and center for generating sustainable long-term wealth. Many have also placed firm emphasis on limiting drawdowns rather than chasing immediate glory by riding momentum. At the same time, some have acknowledged changing circ*mstances and showed a willingness to adapt to new realities with deft realignments. Read on to know how the gatekeepers at mass-market equity funds have managed to grow the wealth pie for investors through market ups and downs.
Also Read: Best equity mutual fund managers 2021: Ranking by ET-Wealth-Morningstar
1. Shreyash Devalkar
Education: B.E. (Chemical Engineering), Masters in Management Studies
Experience: 16 years
5-Year asset weighted return: 19.0%
Average 5-year AUM: Rs 8,558 cr
Risk adjusted returns: 0.9904
Fund managed: Axis Bluechip Fund
AUM (Rs Cr): 29,161
Annualised returns (%)
- 3-Year: 13.92
- 5-Year: 15.92
Profile
Axis Bluechip has not exactly scorched the performance tables during the recent rally, but Shreyash Devalkar’s quality-centric approach that stresses on downside protection continues to power its engines. Acknowledging that the pandemic could not have been modelled into expectations, he has quickly aligned to the new realities. While leaning towards quality, Devalkar has made some subtle changes—gravitating towards B2B centric firms amid lockdown restrictions on mobility.
Quick take
My reading of the market
B2C segments like retail, consumption, retail credit growth has relatively not done well so far due to covid related mobility restriction. This segment offers superior risk reward, but we need to be watchful about covid wave. Opportunities are emerging from tech led disruptors and we need to be careful about tech led disruption in incumbent’s business model.
How my fund is positioned
We are overweight on IT, export-led pharma and cement sectors, and are watching the pandemic scenario for opportunities in the B2C segment.
Top sector bets and top stock picks
Also Read: Best multi-cap mutual fund managers 2021
2. Shridatta Bhandwaldar
Age: 41 Years
Education: B.E (Mechanical), M.M.S (Finance)
Experience: 15 years
5-Year asset weighted return: 16.8%
Average 5-year AUM: Rs 470 cr
Risk adjusted returns: 0.81
Fund managed: Canara Robeco Bluechip Equity
AUM (Rs Cr): 3,679
Annualised returns (%)
- 3-Year: 15.99
- 5-Year: 15.75
Profile
In a broad market uptick, Shridatta Bhandwaldar does not compromise on basic investing philosophy. The focus on downside protection and limiting drawdowns is central to delivering alpha sustainably, he reckons. To this end, Bhandwaldar always maintains certain hygiene checks. The bulk of Canara Robeco Bluechip Equity portfolio comprises proven businesses with earnings visibility and sustainability backed by promoter integrity.
Even as the tide lifted most boats, he remained firm on differentiating between sustainable upgrades and cyclical upticks. This lent resilience to the portfolio amid a challenging environment. He also stressed on identifying top down demand drivers and where these will play out the most. However, maneuvering proved tricky as execution timelines got crunched into a narrow window. Bhandwaldar rues that the market didn’t allow enough time to capture full upside even when the thesis proved right. Still, the fund benefited from early moves into export-led sectors.
Quick take
My reading of the market
Market is at above average valuation from near term perspective and so we expect consolidation with rotation towards opening up sectors from externally focused sectors. We are, therefore, incrementally more constructive on financials, industrials, consumer discretionary, gas value chain, housing and cement with a 1-2 year perspective .
How my fund is positioned
Canara Robeco Bluechip Equity is overweight on financials, industrials, consumer discretionary sectors and underweight on the FMCG and energy spaces.
Top sector bets and top stock picks
Also Read: Best mid- and small-cap mutual fund managers 2021
3. Gaurav Misra
Age: 51 Years
Education: MBA, IIM Lucknow/ BA. Economics (Hons)
Experience: 25 years
5-Year asset weighted return: 16.0%
Average 5-year AUM: Rs 11,388 cr
Risk adjusted returns: 0.70
Fund managed: Mirae Asset Large Cap
AUM (Rs Cr): 27,435
Annualised returns (%)
- 3-Year: 13.81
- 5-Year: 15.00
Profile
Despite the unusually high volatility in recent times, Gaurav Misra has adroitly steered the ship for Mirae Asset Large Cap, maintaining the focus on underlying business strengths with a strong emphasis on limiting drawdowns. He firmly believes that high quality companies always come back stronger after a crisis. If convinced about the merit in the idea, it must be persisted with, irrespective of what transpires in the market. That is why Misra has kept faith in businesses witnessing near-term impairment in earnings but with long-term earnings trajectory intact. He prefers companies addressing a large opportunity size and showing strength of character at all times. While leaning towards structural, compounding stories, he also sets aside a part of the portfolio for value bets or special situations.
Quick take
My reading of the market
I believe the earnings cycle is looking up for the next few years for the corporate sector. This along with improving balance sheet health should provide support from very sharp drawdowns given that near term valuations are above average levels. I believe that the asset class will continue to deliver superior relative returns for investors with a long time horizon.
How my fund is positioned
The Mirae Asset Large Cap Fund is positioned through a combination of strong, well run businesses which take advantage of the domestic structural, new business model and export led opportunity. Additionally the fund has and keeps place for deep value and special situation businesses as well.
Top sector bets and top stock picks
Also Read: Mutual fund managers who have delivered good risk-adjusted return over the long run
4. Swati Kulkarni
Age: 55 Years
Education: B Com. MFM (NMIMS), CFA, CAIIB-I, Certificate Examination of IIB for the Employees of UTI
Experience: 28 years
5-Year asset weighted return: 13.9%
Average 5-year AUM: Rs 5,520 cr
Risk adjusted returns: 0.61
Fund managed: UTI Mastershare Unit
AUM (Rs Cr): 8,580
Annualised returns (%)
- 3-Year: 13.27
- 5-Year: 13.40
Profile
The durability of company moats has been tested during covid, observes Swati Kulkarni. But companies with strong competitive franchise have been able to weather the storm effectively and gained market share. Kulkarni selectively hiked exposure to general insurance, metals and diagnostics players during this period. While conceding that the higher degree of polarisation in recent years has been painful for active fund managers, it has also provided opportunities, she insists. Kulkarni avoided index heavyweights, shunned concentrated exposure and focused instead on companies with improving metrics like return on capital employed. At the same time, having higher active weight in select index bigwigs boosted the fund’s return. Kulkarni sticks to a safety-first stance, guided by the primacy of cash flows over other metrics.
Quick take
My reading of the market
Valuations of the broad market have moved above the historic band, but there are pockets where the demand recovery could lead to better earnings growth than expected and structural drivers could lead to growth runway. As the accommodative stance starts to unwind globally and if the global growth recovery remains patchy, the markets will be very volatile.
How my fund is positioned
The fund continues to invest in companies with sustainable advantages over competition and avoids tactical calls. The portfolio has overweight positions in the telecom, IT, consumer discretionary and pharmaceuticals sectors.
Top sector bets and top stock picks
5. Harish Krishnan
Age: 41 Years
Education: CFA, PGDBM (IIM Kozhikode), B. Tech (Electronics & Communications)
Experience: 16 years
5-Year asset weighted return: 13.9%
Average 5-year AUM: Rs 1,500 cr
Risk adjusted returns: 0.59
Fund managed: Kotak Bluechip
AUM (Rs Cr): 2,945
Annualised returns (%)
- 3-Year: 13.81
- 5-Year: 13.20
Profile
Harish Krishnan played the right cards when he placed faith in companies focusing on gaining mind share and market share, expecting these to benefit quickly as demand recovers post Covid. Rather than buying cheap, he stuck to best-of-breed franchises that would hold the fund in good stead for the long haul. To that extent, he has gunned for steady compounders backed by visibility of earnings and reduced exposure to cyclicals. Krishnan identified revenge consumption and inventory upstocking as strong plays, as well as companies catering to global value chains. He also latched on to opportunities arising from the financialisation of savings but avoided the pain at lower end in the financials space.
Quick take
My reading of the market
After the 15-month rally, we expect the market to consolidate and digest these gains. All segments and stocks have done well till now but over the next 18-24 months, divergence will emerge in companies that have managed the pandemic better (by way of improving their market share and customer relevance or improving their capital structure) and companies that have benefitted from overall stock market buoyancy.
How my fund is positioned
We are holding businesses with a strong growth track record and prudent capital allocation, along with companies exposed to cyclical tailwinds from domestic infrastructure and manufacturing initiatives as well as global spends on tech and digital.
Top sector bets and top stock picks
(Source: Mornigstar India)
