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IDFC Sterling Value Fund

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IDFC Sterling Value Fund
Morningstar India - 08 January 2020

Anoop Bhaskar took over its reins in April 2016. He is an apt fit here and has the requisite skill sets to successfully execute the strategy. The fund was shifted from its traditional small/mid-cap category to the value category last year.

Anoop Bhaskar draws on his experience, in-depth understanding of stocks, and analyst recommendations while investing. He runs the fund using relative valuation strategy rather than absolute valuation. Bhaskar looks at three attributes for evaluating a stock on valuation--that is, price/earnings, price/book, and enterprise value/sales--over a trailing 12-month period. A stock qualifies on his valuation expectation if two out of these three attributes are lower than the industry average. While investing, he tries to understand long-term trends and pick fundamentally sound companies, having monopolistic presence, at early stages, and to have a competitive advantage in their respective spheres. Bhaskar prefers companies that have a decent amount of promoter holdings, good cash generation, low leverage, and businesses that are profitable over a cycle. He avoids businesses that show profitability in spurts. He can skilfully deploy tactical plays as well to capitalise on short-term opportunities. Sell-side research is extensively used, and the in-house team builds its investment thesis on that. Nonetheless, buy and sell decisions are made internally.

While the bottom-up stock-picking is evident, the top-down approach isn’t ignored either. Bhaskar prefers constructing a diversified portfolio and doesn’t believe in taking cash calls. Given its strategy and portfolio positioning, the fund’s fortunes will be directly linked to the country’s economic growth and performance.

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