For most average investors, investing their money in a fund with a proven historical track record is a good start. The simple answer to this lies in the current state of the stock markets, where the difference between the best performing and the worst performing fund is fairly narrow. The reason for such an outcome is the current bull run, when it becomes difficult to differentiate between the good and the not so good fund.
Thus, it becomes pertinent to check the fund manager’s ability to manage the downside, when it occurs and also their ability to manage a fund with bigger assets because of an increase in money flows into it. It is evident that many a times, short-term performance may be driven by luck, but in the long run, wealth creation has always been driven and heavily influenced by the fund manager's skills.
This week, we will be featuring interviews of eight of the finest money managers, who have repeatedly demonstrated their superior skills with consistent returns, within the defined investment framework of the funds they manage. As you evolve as a mutual fund investor, start assessing fund managers to invest with those who have proven their skills; after all as goes the saying—form is temporary, class is permanent.
What approach do you practice towards investing in the fund(s) you manage?
As a part of our investment philosophy, we try to identify companies across sectors which are run by capable and credible management teams. The companies should have demonstrated a long history of generating positive cash flows, superior ROCE, and should possess sustainable competitive advantages. We follow a buy and hold approach. We also look at some cyclical businesses at the cusp of a turnaround, where ROCEs are slated to move up in the foreseeable future.
What is the one theme that you are bullish on now?
We consider that our strength lies in identifying superior companies across different sectors. However, to talk of specific themes, we feel that implementation of GST would be quite transformational for the country and have far reaching implications on many businesses. Due to this reform, we expect consumer oriented companies operating in the organised sector to do well in the next 3-5 years and we hold a positive view here.
One investing lesson you will never forget?
“Be fearful when others are greedy and be greedy when others are fearful,” this quote by Warren Buffet is the greatest lesson for me. True challenge lies in its implementation as it is very easy to say, but difficult to follow in a real life scenario.
Vinit Sambre, Fund Manager, DSP BlackRock Investment Managers