HDFC Corporate Bond Fund
The fixed-income team at HDFC has carved a niche for itself in running high quality low-duration strategies, which is the premise of this fund. After managing this fund since its inception in December 2012, portfolio manager Shobhit Mehrotra handed over its mantle to Anupam Joshi in October 2015.
The investment approach relies on fundamental research. It entails combining qualitative aspects with quantitative analysis. The investment team prepares the coverage list with a strong focus on the company management and track record, financial strength of the promoter group, and corporate governance standards. Meetings with management are followed by rigorous quantitative analysis to get a measure of the company’s creditworthiness. The team also draws on the expertise of its equity team. The fund company uses a proprietary model in which qualitative and quantitative inputs are used to arrive at a credit score for each issuer. This in turn used to help managers determine the exposure they can take to each issuer, thereby acting as a risk management tool for the individual portfolio and the fund company. Here, the investment team lays more emphasis on risk control, thereby focusing on balancing safet liquidity, and return.
Anupam Joshi’s emphasis on liquidity and risk control continues to be borne out by the fund’s portfolio, where currently almost 100% of assets are invested in AAA or equivalent rated securities. Joshi will build cash when there aren’t attractive investment opportunities and to ride out periods of volatility and uncertainty.
ICICI Prudential Bluechip Fund
Manager Biography And Fund Strategy
“Anish Tawakley and Rajat Chandak jointly manage ICICI Pru Bluechip Fund. Tawakley joined the fund house in April 2016 as head of research and took the reins of this fund in September 2018. The investment team is remarkably large and collaborative, comprising 12 research analysts and 11 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%. 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. 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. However, they are not averse to investing in companies that do not fulfill all their qualitative criteria if the stock offers a trade-off against valuations. This way 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. Cash levels typically remain below 10%, in line with the strategy to remain fully invested.”