Mr. Manish Gunwani
Designation: CIO Equity Investments
Manish graduated from IIT Chennai with a B.Tech and has a Post Graduate Diploma in Management from IIM Bangalore. Manish has 21 years of work experience primarily in equities spanning roles in equity research and fund management. He has also co-founded a technology company in the document management space.
During his stint at ICICI Prudential AMC, he managed two flagship funds of the mutual fund whose assets grew from $1bn to $5bn in 5 years. One of the funds grew from $50m to $3bn becoming the second largest fund in the industry. As deputy CIO he was instrumental in various aspects of asset management including setting up research processes, product strategy, developing talent of the team etc.
Manish has immense experience in equity research and has also spent two years working in a portfolio management company whose focus was midcaps. Having traveled extensively across the world, Manish has attended many global investment conferences and seminars.
Q. There has been a good correction in the Mid-cap and Small-cap space. What have been the reasons for the same?
Answer: For a period of 3 years till around Jan 2018 we had witnessed a significant outperformance of the Mid & Small Cap space as compared to the large cap space. We believe this phase is normalization of valuation rather than a change in the fundamentals. Further the recent impact on macro conditions on the back of spike in Crude Oil prices its related pressure on Current account etc. would also have led to some shift from Mid/Small cap space to relatively stable large cap companies
Q. How do you assess the valuations in the Mid-cap and small cap space? What is the likely trend in the space over the next 1-2 years?
Answer: Our focus has always been on buying companies with strong credentials and execution track record, especially in the mid and small cap categories where sustainability of the business over the long term is always in question. A major part of the recent correction has been in sub-scale and inferior balance sheet businesses. However, wherever there has been meaningful correction in high quality companies, we have taken advantage of the same and continue to do so, when we see fundamentals improving.
Q. Within the markets, which sectors do you see attractive going forward? Where have you been focusing on for your picks?
Answer: From a valuations perspective combined with long term growth potential we like big corporate lenders, Insurance and Pharma. We also like industrials in segments which are likely to witness a quick recovery if the economy revives. Also there are some green shoots emerging in the consumer discretionary space which we are evaluating.
Q. Has there been any change in the outlook of global investors towards India? Has there been any change in India's share in the global equity pie?
Answer: India has been traditionally a significant overweight for global investors but in the last 2 years this has reduced a bit. The reasons for this are – commodity price bounceback since 2016 helping countries like Brazil etc do better, soft earnings cycle in India till now, Indian currency getting hurt by high oil prices etc..
Q. What has been your fund house approach in managing the current volatility and in making investment calls?
Answer: Our core investment philosophy is ‘Growth at Reasonable Price’ with a focus on good quality businesses with sustainable competitive advantages. We continue with the same approach and believe the current volatility can throw up opportunities to selectively own such quality companies which can create a reasonable Alpha over the long term. As a prudent risk mitigation plan we maintain well diversified portfolios across all our non-thematic funds and have increased exposure to defensive themes on attractive valuations & relative stability.
Q. What would you say to an existing equity investor and to a new long term equity investor? What investment strategy would you suggest?
Answer: Asset Allocation is a key ingredient for successful long term wealth creation, hence investors should evaluate their allocation based on their risk appetite, goals and time horizon. In the current market context, we would be more comfortable with large cap oriented diversified funds and investors can consider investing through the systematic investment route. Given the likely volatility we would suggest lump sum investments in equity oriented hybrid products like Balanced Advantage Fund or Aggressive Hybrid Funds.
The information herein below is meant only for general reading purposes and the views being expressed only constitute opinions and therefore cannot be considered as guidelines, recommendations or as a professional guide for the readers. The document has been prepared on the basis of publicly available information, internally developed data and other sources believed to be reliable. The sponsors, the Investment Manager, the Trustee or any of their directors, employees, affiliates or representatives (‘entities & their affiliates”) do not assume any responsibility for, or warrant the accuracy, completeness, adequacy and reliability of such information. Recipients of this information are advised to rely on their own analysis, interpretations & investigations. Readers are also advised to seek independent professional advice in order to arrive at an informed investment decision. Entities & their affiliates including persons involved in the preparation or issuance of this material, shall not be liable in any way for any direct, indirect, special, incidental, consequential, punitive or exemplary damages, including on account of lost profits arising from the information contained in this material. Recipient alone shall be fully responsible for any decision taken on the basis of this document.