Prashant Jain, India’s Peter Lynch, is legendary not just for his performance, but also his character

A quiet and extremely reserved Jain, always polite to a fault, set the tone of India’s equity research-led investing from 1991, when the nation liberalised and welcomed foreign investment in a bid to boost its ailing, Soviet-era economy.

Also read: End of an era: Prashant Jain, votary of 'value' investing, leaves HDFC MF

Jain, 54, has seen it all. He navigated his funds with the elan of a captain on the high seas.

Extremely hands-on and very value-conscious in his stock bets, Jain always stuck to quality businesses, remained spread out across sectors and assiduously kept away from the richly valued space.

“Prashant has a long list of what a fund manager should not do," Kumar adds. “Equally, he has been a creator of the thought process of how to spot great investment bets."

Jain was often the first person to come to HDFC MF’s offices and also among the last to leave, if not the very last. His checklist of practical stock picking is the byword in India’s cut-throat fund industry, where many money managers regularly opt for short-term measures to boost net asset values.

Moneycontrol spoke to several of Jain’s peers and the adjectives that often came out to describe him were: “consistent”, “ahead of the pack”, “full of humility”, and “very ethical”.

Jain’s stock picking is a distillation of the old fashioned way of adding long-term value to a fund’s portfolio. Despite his rockstar status, Jain was a regular on the shop floor and regularly quizzed CEOs at factories even on the minutest of expense details. He travelled extensively to keep himself abreast on how expansions were being executed even as he kept a hawk’s eye on valuations.

Retaining investor faith

Peer and rival Nilesh Shah, Managing Director at Kotak Asset Management, speaks at length and very fondly of Jain — both as an individual and as a top-end fund manager.

“Prashant Bhai will always be remembered for bringing back investors to mutual funds in the mid-1990s,’’ Shah says, noting that a series of scams in the mid-1990s had dented confidence in equities.

“Clearly, he is a legend. I have never seen him complain about anything. His performance and ability to retain the faith of investors for 25 years speaks for itself."

Shah, himself an industry stalwart, recalls instances where Jain, despite being the senior-most fund manager, would often insist that others get the first chance to put questions to company executives. Shah choked with emotion in relating Jain’s meetings with sell-side analysts and brokers.

“Aadmi ki position dekh kar Prashant bhai ki fitraat nahi badalti,’’ Shah says, lapsing into Hindi. “Waise to bahut saarey CIOs hain jinka ego aasmaan mey rehta hai, lekin Prashant bhai was always able to connect to investors and distributors in a manner that they always looked forward to hear him speak on markets."

Watch: Prashant Jain Quits HDFC AMC; A Look At His Career, Investment Philosophy & Life

Long-term focus

Jain has helmed HDFC AMC as Chief Investment Officer since 2003. He managed HDFC Balanced Advantage Fund for 27 years, since its inception, making his journey one of the most storied across the investing universe. The 43,000-crore-rupee fund has returned a CAGR of 17.9 percent since 1994 despite a very heavy allocation to debt.

He managed two other schemes — HDFC Top 100 and HDFC Flexi Cap — for nearly two decades. Both funds have turned in a CAGR in excess of 20 percent each year.

Jain’s stellar tenure is often compared with that of legendary US fund manager Peter Lynch.

Jain was ruthless with over-extended stocks much earlier than rivals. And his exits have been legendary — he was the first to sell off most of his tech holdings ahead of the dotcom bust in 2000, despite public opprobrium. Again, in 2007-08, he exited the absurdly valued infrastructure sector ahead of the game, saving a pretty penny for fund holders.

The PSU blip

However, markets have been slightly unkind to Jain for the last 5-7 years. His unrelenting focus on value investing in beaten-down public sector companies may have resulted in a ‘mediocre’ performance, says Value Research’s Kumar.

While PSUs offer relatively inexpensive valuations compared with their private sector peers, most value unlocking happens only when the government sells off such companies lock, stock and barrel and this is something that has not happened regularly in Indian capital markets over the last decade.

“The government's (divestment) timeline has been different from investors’ timeline,” says Kumar.

HDFC’s value-focused funds also missed many highly overvalued stocks that remained so for years, Kumar adds. Their absence impacted returns.

Jain leaves behind an impeccable research and fund management team at HDFC AMC. His future plans remain unknown. Jain could not be reached for this article.

But as always, his exit has been well timed.

Jain became India’s first fund manager to run an equity portfolio in excess of Rs 100,000 crore four days ago. He put in his papers soon after.

“An era ends, undoubtedly,’’ says Shah.