The past one year was a test of character for mutual fund managers as they struggled to balance objectives of their schemes and aspirations of investors amid market upheaval.
Some did exceptionally well by cruising along the path laid down by their fund houses. The fact that they did not have the luxury of acting outside the in-house fund management rules and scheme objectives made their job tougher.
To give you the view from the other side, we interviewed some of country's finest fund managers and asked not just about their style and strategies but also the reasons for being bullish on some sectors, exposure to stocks with specific market caps and their view of what the markets hold for investors. We also asked how they managed to keep losses in check and beat their benchmark indices in a turbulent 2011-12.
Fortunately for us, they were fairly open with their responses and eager to explain their strategies for the past three years.
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"Valuations are reasonable and Most negative news is already factored in."
Anand Radhakrishnan, Senior Vice President and Portfolio Manager, Equity, Franklin Templeton Investments
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Investment strategy:
Our approach has been to construct a well-diversified portfolio of stocks with a long-term perspective. We continue to hold stocks that fall out of favour if we believe that the fundamentals remain strong. Though growth stocks form a large part of our portfolio, we have also tried to capitalise on emerging opportunities in value/cyclical stocks.
Portfolio construction:
We hold 35-40 stocks. The fund manager strives to maintain adequate diversification across companies and sectors. No single stock is expected to exceed 10 per cent of a portfolio's assets. We do not believe in taking cash calls. We adopt a buy-and-hold strategy and our average holding period tends to be two years.
Stocks & sectors that clicked:
Among sectors, the top contributors were consumer staples, consumer discretionary and healthcare. Among individual holdings, Bajaj Auto, Hindustan Unilever, Asian Paints and Grasim Industries were the top contributors in 2011.
Stocks and sectors that proved a drag:
Financial and industrial holdings lowered returns. Stocks that hurt were ICICI Bank, Reliance Industries, Crompton Greaves and Infosys.
Market outlook:
Valuations are reasonable and most negatives are factored in. Private consumer demand remains largely resilient and is helping corporate India deliver strong revenue growth.
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