Anish Tawakley and Rajat Chandak jointly manage this fund. The investment team is remarkably large and collaborative, comprising 10 research analysts and 12 portfolio managers.
The portfolio managers ply a benchmark-conscious strategy, and sector weightings are aligned to those of the IISL Nifty 100 Index, subject to a deviation of plus or minus 5%. Hence, the top-down approach has little relevance. They use the in-house large-cap model portfolio as the initial reference point when choosing stocks. Although the managers also use the firm’s internal fair value approach and the alpha alert, the model portfolio remains the most important part of the security-section process. Within a sector, the managers perform business analysis to identify the best ideas. In addition, they use free cash flow/enterprise value ratio (three-year average) as an appropriate parameter, along with price/book value and return on equity, among others, to determine a company’s fair value. Typically, the fund will invest only in the top 100 stocks by full market cap. The managers have a quality bias when choosing stocks: They favour companies with robust business models, strong entry barriers, and the ability to scale up without eroding profit margins. They follow a barbell strategy and either end up paying more for high-growth stocks; and at the same time focus more on attractive valuations.
This is a true-to-label fund and maintains about 80%-90% of assets in large-cap stocks. The portfolio has historically been well balanced across sectors. The portfolio managers follow a benchmark-conscious approach and align portfolio sector weightings to those of its benchmark, IISL Nifty 100 Index. While it could be viewed as constraining, it also reduces the risk of underperformance in the fund.