Interview with Miten Lathia - Fund Manager - Equities - HDFC Asset Management Co. Ltd
The market is near record high, but it has to be seen in the context of time lapsed, the level of interest rates and the returns on alternate asset classes, Miten Lathia - Fund Manager - Equities - HDFC Asset Management Co. Ltd, said in an exclusive interview with Kshitij Anand of Moneycontrol.
Q) The Indian equity market is trading at record high – good news for investors, but does it spell trouble for fund managers? Some fund managers actually prefer to sit on cash and then deploy it on corrections. What is your strategy and why?A) As a philosophy, HDFC AMC does not take large cash calls. I do not generally keep more than 5-7 percent cash. The market is near record high but it has to be seen in the context of time lapsed, the level of interest rates and the returns on alternate asset
classes. Investment ideas are fewer compared to the past but there are reasonable opportunities.
Q) How can investors pick companies which could become the next big thing on D-Street?
reflective of execution and captures the quality of management.
Then there are risks to be considered. These could come either from technological changes, regulations, change in industry structure or trend in input prices, etc.
Q) Equity is indeed the best asset class to be in if investors want to build their portfolio. But, do you think valuations look bit stretched and investors should take caution at current levels and then look at buying on dips?A) As mentioned earlier, valuations cannot be seen in isolation. Equity valuations are primarily dependent on earnings growth and the level of interest rates. While interest rate reduction clearly favours a higher market valuation, earnings growth has been
getting postponed. However, we believe this should resume in the current fiscal year.
Q) MF fund industry is flooded with flows right now. Do you see the trend continuing, and if yes what are the kind of estimates you are building for the next few years?
A) The mutual fund industry has become mainstream now and is likely to be a part of every individual’s financial plan. There could be deviations but the trend is now well entrenched.
Alternate asset classes like gold and property not doing well has also contributed to the flows into equities.
Q) Your fund HDFC Capital Builder has been a consistent performer since inception. Tell us more how you base your investment decision while picking stocks for the portfolio?
A) The fund follows a bottom-up stock picking approach. That said, the NIFTY 500 is the benchmark and due respect is given to index heavyweights where deemed fit. The fund has no sector bias, no style bias and no market cap bias.
This gives good representation to a variety of sectors, a good mix of value and growth stocks and a reasonable mix of large and mid-cap stocks. Not having market cap bias also means the fund can tilt its weight towards where the opportunity is.
Q) What makes HDFC Capital Builder Fund stand out compared to other funds from other business houses?A) The fund has outperformed its benchmark in 18 out of past 22 years. I have been managing it for over the past 5 years. Despite the fund’s modest AUM size, we usually run about a 50 stock portfolio given the wide array of opportunities available in the Indian markets.Not sure which mutual funds to buy? Download moneycontrol transact app to get personalised investment recommendations.