Fund managers should respect client mandate while investing, says Raamdeo Agrawal

Today, Motilal Oswal has retained Agrawal's core philosophy of focused high-convention investing.

Public fund managers irrespective of their investment style need to factor in risk management while investing client money, says Motilal Oswal’s Raamdeo Agrawal. He was talking to the media about his learnings as an individual investor, and how different it is from the AMCs investing style. “When it comes to managing your own money you can decide how you want to manage. But clients have different ways of assessing portfolios,” he said.

Also Read: Tsunami of savings, doubling of equity investors to drive market, says Raamdeo Agrawal

Agrawal spoke about how as an individual investor he used to “go for the kill” and take the maximum kind of risk. “It was just buy and hold and not care about the allocation or underperformance. We were fearless, and we still are. But we have understood that people do not like underperformance is not liked by people,” Agrawal explains. Hence, the role of risk management is significant.

Fund managers cannot go for an irrationally high allocation of 15 or 18 percent in a single stock. “I don't even mind having a 30 percent allocation of my portfolio in a single stock. I have that kind of appetite if I know the company well. But I don't think people have that, that is not the mandate investors are giving us. Public money is very different and we have to respect that,” he says.

Also Read: Indian equity markets are expensive but still better-placed globally: Raamdeo Agrawal

People are also looking for consistency, while they want high performance they want consistency. “I think we have to respect the public mandate. So, even if the returns are predictable at 3-4 percent they want consistency and management of the downside risk,” he explains.

Today, Motilal Oswal has retained Agrawal's core philosophy of focused high-convention investing. “Our allocations have become much more distributed and still it remains very focused. We don't have 30-40 stocks, there are 25-30 stocks, and that's what every scheme has mandated. We are on the same track just risk management has been added,” he said,

Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.