Former Goldman Sachs fund manager makes a comeback to mutual funds with this NFO. Should you invest?

WhiteOak Capital Mutual Fund’s Flexi Cap Fund opened on July 12 for subscription. The new fund offer (NFO) is the first fund to be launched by WhiteOak Capital MF after its acquisition of YES MF got SEBI approval towards end of last year.

The scheme

As it is a flexicap scheme, the fund manager will have the freedom to invest across markets caps – large, mid and small-caps. WhiteOak Capital, as reported earlier by Moneycontrol, is few of the newer crop of fund houses that want to focus only on active fund management and aim to deliver index-beating returns for investors.

Also read: The active fund warriors: Three mutual fund houses that aim to take passive funds, head on

What works

The newly-launched fund house is backed by WhiteOak Capital group, founded by Prashant Khemka.

Khemka was former chief investment officer (CIO) and lead portfolio manager of GS India equity and global emerging markets, at Goldman Sachs Asset Management.

Founded in 2017 by Khemka, WhiteOak Capital has been investing in Indian stock markets and managing assets for different class of investors. It manages Indian equity investments for foreign investors through its offshore funds, as well as for domestic investors through its PMS and AIF products.

Collectively, WhiteOak Capital manages approximately Rs 41,000 crore of investor assets.

The fund house has got SEBI approval to allow it to use WhiteOak Capital’s 30-member strong research team.

Talking about the fund house’s investment process, Ramesh Mantri, CIO, WhiteOak Capital MF says that the focus is on identifying good businesses at right valuations and not get influenced by macro-economic variables.

Rather than taking sector rotation calls or macro calls, the fund house will look at building a portfolio that balances between pro-cyclical businesses and defensives.

Mantri points out that the fund house doesn’t follow the widely-used valuation ratios – the price-to-earnings or price-to-book ratio – to identify investment ideas.

“We have our own proprietary investment framework (OpCo-FinCo) that involves splitting the business into two parts - as a financing company and operating company,” he says.

Prateek Pant, chief business officer, WhiteOak Capital, says the group’s research team has demonstrated the ability to identify unique investment ideas in mid- and small-cap space, which are not covered by even the sell-side broking analysts. “Our flagship PMS scheme has 55 stocks, of this 40 are mid- and small-cap stocks,” he says.

What doesn’t

White Oak Capital Flexi Cap Fund is a new fund by a new fund house.

Mutual fund distributors say they’d prefer to be in the wait and watch mode. “The management of the fund house has a strong track-record of running mutual fund businesses, but we prefer funds that have built strong performance track-record, understand the investment processes and stock portfolio development, before recommending them to our clients,” says Nisreen Mamaji, founder, Moneyworks Financial Services.

WhiteOak Capital has appointed Aashish Somaiyaa chief executive officer to head the MF business. Somaiyaa was earlier managing director of Motilal Oswal Mutual Fund.

Rupesh Nagda, founder and managing director, Family First Capital, has the experience of allocating client investments to WhiteOak Capital’s PMS offering. He says, “Unlike other PMS-es that run highly concentrated portfolios, they operate with a widely-diversified portfolio of around 40-50 stocks. They also tend to be conservative with their outlook. So, they should be able to make the transition to a mass-product like mutual funds.”

WhiteOak’s Pant points out that both Khemka and WhiteOak Capital have a track-record of managing flexicap strategies.

Moneycontrol’s take

While it is preferred to go with a scheme with an existing track-record, but if you wish to give a shot to WhiteOak Capital MF given the founder and group’s track-record, you can start with a small allocation to the scheme. Or consider investing after the NFO period, after the fund has built some track-record and starts disclosing its portfolio. The NFO closes on July 26.