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Best 5 Managers of Multi-Cap in Mutual Funds.

ET Wealth together with Morningstar India have selected and ranked India's best equity fund managers, across categories, based on their five-year risk-adjusted returns.

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India’s best equity fund managers, across categories, based on their five-year risk-adjusted returns. Here are the best 5 in the multi-cap category. These managers have proved their grit while managing stock exchange unpredictability and have delivered consistent returns throughout the years. Read about every one of these managers, their best stock and sector picks and what they believe is the promising topic for the next 5 years.

1. Jinesh Gopani, Axis Mutual Fund 

Age: 39 Years 

Education: B.Com, Master of Management Studies 
Experience: 15+ years 

5-year asset-weighted return: 23.88% 
Average 5-year AUM: Rs 8,620 crore 

Profile 
Jinesh Gopani has an impressive track record, especially in steering the country’s biggest tax-saving equity fund. His approach has been to identify secular growth stories and stay invested for the long term rather than earning a quick return by opting for momentum-based plays. He prefers leaders and potential leaders across the sector that boast of a strong business model or have the ability to disrupt existing models. 

Capital preservation is an important pillar in his investing framework and he stresses on ensuring better downside protection. This is evident in the superior risk-return profile of the more aggressive of his funds— Axis Focused 25. Despite the burgeoning size of his tax-saving fund, Gopani has maintained a compact portfolio as it allows him to take meaningful exposure in his conviction bets. 

Top 3 stock picks 

  • 9.67% HDFC Bank
  • 7.95% TATA Consultancy Services
  • 7.44% KOTAK Mahindra Bank

Top 3 sector bets 

  • 41.72% Financial services
  • 25.45% Consumer cyclical
  • 12.39% Technology

Funds managedMF schemes managed

QUICK TAKE 

a) On evolving market 
“After a phase focused on quality, the rally has now become more broad-based. Earnings remain key and the numbers this time have been positive. We remain quality biased, and this has helped us deal with market volatility.” 

b) Navigating the current environment 
“Our focus remains on quality. Results of our universe of stocks have been strong. Staying with fundamentally sound companies that have consistently delivered earnings growth has been key to our strategy of generating alpha.” 

c) A promising theme for the next 3-5 years 
“We are bullish on rural and consumption themes. Here we are focusing on companies that can be market disrupters. There are two types of disrupters, traditional bellwethers looking to reinvent the marketplace and new disrupters that enter the markets and change the way the industry does business.” 


2. Dhimant Shah, Principal Mutual Fund 

Age: 45 Years

Education: B.Com and ACA 
Experience: 18+ years 

5-year asset-weighted return: 27.35% 
Average 5-year AUM: Rs 714 crore 

 

Profile 
The ferocity of market reactions in recent years have taken most by surprise, admits Dhimant Shah. The market tends to react much before one can analyse the situation, which has necessitated a greater speed of response, he points out. Shah has stressed on identifying businesses with healthy growth potential, aided by visible competitive advantages and backed by an able management. 

His funds have favoured companies that emerged stronger after the market downturn five years ago. Shah believes that the market will significantly mature in the coming years as domestic participation increases—and show better resilience to foreign selling. With the quality of corporate results likely to improve, stock selection will be critical to sustaining alpha, says Shah. 

Top 3 stock picks

  • 2.69% Britannia Industries
  • 2.46% Eicher Motors
  • 2.04% Bajaj Finance

Top 3 sector bets

  • 20.59% Financial services
  • 19.90% Consumer cyclical
  • 14.88% Industrials

Funds managedMF Schemes managed

QUICK TAKE 
a) On evolving market 
“The market appears to be overvalued with the risk-reward scenario favouring a downside. The key risks will be falling government spending, forthcoming elections, rising inflation, currency risks, external risks of oil and repercussions of a trade war.”
 b) Navigating the current environment 
“Steering through the current market is slightly difficult as volatility has increased sharply in recent months. We could take higher cash calls, increase allocation to defensives and book profits regularly.” 
c) A promising theme for the next 3-5 years 
“Companies catering to defence appear strong for the next 3-5 years as they could see meaningful growth in the offsets and the size of opportunities that come their way. Select auto-ancillaries also show promise, given the rising affluence, middle-class consumption and the scrapping policy.” 

3. Rajeev Thakkar, PPFAS Mutual Fund 

Age: 42 Years 

Education: B. Com, Chartered Accountant, CFA, and Graduate, ICWA 
Experience: 17+ years 
5-year asset-weighted return: 19.23% 
Average 5-year AUM: Rs 636 crore 
Profile 
Rajeev Thakkar has clearly shown what it takes to steer a value-based fund through market conditions hostile to value-based investing. With mid- and small-caps dominating investors’ mind space in recent years, he acknowledges that a lot more caution and spadework is needed to navigate the tricky multi-cap space. While leaning towards value, Thakkar has opted not for the cheapest stocks but for reasonably-priced companies backed by better earnings visibility. Thakkar’s thrust has been on companies whose return on capital employed has been consistent across business cycles. He does not believe in staying fully invested at all times, preferring to take cash calls when faced with a scarcity of investable ideas. He also stresses on the need to diversify across geographies to contain volatility—select bets in foreign companies have worked in his favour. 

Top 3 stock picks 

  • 10.65% Alphabet
  • 6.78% HDFC Bank
  • 5.89% Bajaj Holdings and Investment

Top 3 sector bets 

  • 28.64% Financial services
  • 24.83% Technology
  • 17.66% Consumer cyclical

Funds managed

MF Schemes managed

QUICK TAKE 
a) On evolving market 
“The market is at elevated levels relative to earnings. We are also headed toward slightly higher interest rates, both in India and globally. Further, India is heading towards state and general elections. So, you cannot rely on broad market rallies for returns. You have to be absolutely sure about the business fundamentals and the valuations of the stocks you invest in.” 
b) Navigating the current environment 
“Our approach is to go by the merits of each company, rather than rely on broad themes or macroeconomic trends. We currently have a mix of high conviction stock portfolio and some amount of cash which will be deployed when attractive opportunities emerge.” 
c) A promising theme for the next 3-5 years 
“The shift in market share from public sector banks to private sector banks is benefiting some of our holdings. The shift in advertising from traditional to the online medium is benefiting our digital investments—Alphabet (Google) and Facebook.” 

4. Ajay Garg, Aditya Birla Sun Life Mutual Fund

Age: 47 Years 

Education: B.E and MBA 
Experience: 24+ years

5-year asset-weighted return: 22.45% 
Average 5-year AUM: Rs 2,930 crore 

Profile
In an environment where various sectors are witnessing disruption, Ajay Garg insists that companies willing to change and evolve through better ground research and product differentiation will emerge stronger. He places a strong emphasis on future leaders and says there are several promising companies in every sector. 

Specifically, companies catering to the domestic market—that has huge growth potential due to discretionary spending—will benefit significantly, insists Garg. He also focuses on corporate governance practices, avoids leveraged plays, and prefers companies that are cash surplus and not in the habit of diluting share capital for expanding a business. 

Pointing to the skew in stock market indices, Garg also stresses on diversification and takes a differentiated position vis-a-vis the index. He finds the financials segment crowded and has chosen not to align with the index. 

Top 3 stock picks

  • 6.88% Gillette India
  • 6.87% HoneywellNSE 0.11 % Auto India
  • 6.74% Reliance Industries

Top 3 sector bets

  • 22.79% Consumer cyclical
  • 18.30% Financial services
  • 13.31% Healthcare

Funds managedMF Schemes managed

QUICK TAKE
a) On evolving market
“We see improvement in the economy and better earnings visibility. However, just 7-8 stocks have contributed almost 100% of the returns while the remaining stocks have seen meaningful corrections. Poor quality stocks are having a hard time justifying their valuations.” 
b) Navigating the current environment
“We will continue investing in quality companies catering mainly to the domestic space since the growth potential in India itself is quite big, especially because of the implementation of a mega reform like the GST tax.” 
c) A promising theme for the next 3-5 years
“Research-based firms with a technological edge over peers and a strong brand that gives them pricing power are a promising theme in our fast-changing world that is led by the disruption. These basic characteristics, combined with scale, vision and management bandwidth will enable such companies to continue to have an edge over the competition in the next 3-5 years.” 

5. Mrinal Singh, ICICI Prudential Mutual Fund

Age: 39 Years 

Education: BE and PGDM 
Experience: 14+ years 
5-Year asset-weighted return: 22.49% 
Average 5-year AUM: Rs 11,189 crore 
Profile
Mrinal Singh’s value investing tilt has often been at odds with the market in the past few years, yet he has remained steadfast in his approach. Even as prices and investor sentiments have changed rapidly, Singh has prioritised valuation and has been tightfisted. He is optimistic about earnings growth and has chosen to stay invested for longer periods to allow his investments to unlock value. As investor sentiments have veered from one segment of the market to another, he has deftly re-aligned the portfolio to capture the emerging value. Singh has maintained a strict focus on bottom-up stock selection while taking higher deviations relative to the index. 
Top 3 stock picks
  • 11.20% Sun Pharma Industries
  • 6.36% Infosys
  • 5.79% Wipro

Top 3 sector bets

  • 15.15% Technology
  • 13.19% Healthcare
  • 10.61% Consumer cyclical

Funds managed
MF Schemes managed

QUICK TAKE

a) On evolving market
“Recent structural legislations like the Insolvency and Bankruptcy Code and National Company Law Tribunal along with GST are likely to do well for the long-term health of the economy and the industry. Also, there are green shoots of growth in the domestic economy, particularly in rural and investments-related segments.” 

b) Navigating the current environment
“Bottom-up stock picking with adherence to superior management quality, strong balance sheet and reasonable valuations are what we will be adhering to. We expect the market volatility to remain elevated. On a valuation basis, we prefer large-caps over mid- and small-caps.” 

c) A promising theme for the next 3-5 years
“Value investing and high dividend yield are the two investment styles we believe will serve for long-term investors well.”

Source: The Economics Times 

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