Money managers who took the risk in an uncertain market made quick bucks for high net-worth investors (HNIs) during 2018-19. Some 27 portfolio managers launched at least 40 portfolio management schemes during this period.
As many as five strategies delivered over 20 per cent returns to investors during this period. Emkay Investment Managers’ Emkay LEAD PMS was one such strategy, which delivered 21.60 per cent return in 2019 and 28.10 per cent since its inception in November 2018.
Emkay LEAD is a largecap- and midcap-oriented strategy that invests in companies with long-term sustainable growth and dominant leadership positions in their respective segments. During 2018-29, the scheme invested predominately in financials, consumers and chemicals stocks.
“We had nil exposures to utilities, industrials, commodities and communication services, which helped us save on any significant drawdown,” says Raj Gala, Senior Portfolio Manager, Emkay Investment Managers.
He said the scheme continued to invest in sectors or companies that are expected to benefit from value migration amid growing domestic consumption.
The fund currently has over 40 per cent exposure to the BFSI space with focus on private banks, retail NBFCs and life insurers, which are expected to benefit from financialisation of savings and formalisation and digitisation of the economy. The fund had 8.88 per cent exposure to the life insurance sector as of December 31.
“We expect the BSFI segment to continue to deliver decent returns in next few years,” Gala said.
The fund manager also finds attractive opportunity in the automobile sector, which has been facing headwinds due to lower sales, and has put 13.40 per cent of the fund’s asset in this space.
“The domestic auto industry contributes 49 per cent of manufacturing GDP and 15 per cent of GST revenues while supporting 37 million direct and indirect jobs. We expect the auto sales cycle to see a gradual recovery due to a confluence of factors such as low base, better rural sentiment, lower interest rates and a possible introduction of a scrappage policy in the next few quarters,” he said.
Gala believes the chemical sector remains a value migration play in view of China’s pollution control measures, cost and currency issues. His fund has a 6.70 per cent exposure to the sector. “We remain bullish on life insurance, consumer and the chemicals space,” Gala told ETMarkets.com.
In terms of stock holdings, Berger Paints, Bajaj Finance, Whirlpool India, Avenue Supermarts and Pidilite Industries enjoy a cumulative 33.50 per cent weightage in the portfolio.
“India’s economic growth will continue to draw the attention of investors across the world, as they look to find an oasis of growth that can reward investors with a long-term horizon,” Gala said.
Foreign portfolio investors poured over Rs 1 lakh crore (net) in domestic equities in 2019.
“The recent volatility offers long-term investors an opportunity to invest and increase allocations for wealth creation over time. Valuations of Indian equities continue to remain above long-period averages. Indian equities are trading at 23 times FY20E. One should expect 8-10 per cent growth CAGR over next 2-3 years,” he said.
Raj Gala
Fund Manager, Emkay Investment Managers Ltd.
Raj Gala is a fund manager with more than a decade of experience in managing funds, asset allocation, analysing companies, and tracking sectors. He brings exceptional insights into equity advisory (PMS/ ND-PMS/ direct equities). In his past role as a senior equity analyst, he has evaluated multiple sectors and managed event-based trading strategies.
