S. Krishna Kumar (CIO of equities) has been managing this fund since 2012. With more than 21 years’ experience, we think Krishna Kumar stands out as an efficient stock-picker with small/mid-cap segment as his forte.
The investment process is essentially bottom-up, with the manager seeking to invest in growth stocks that have the potential to double over the fund’s investment horizon. The fund house has a strong thematic undercurrent that can influence sector selection, while stock selection remains mainly driven by fundamentals. The manager tries to balance the stock’s perceived return, growth, and valuations while maintaining lower liquidity risk. A combination of absolute and relative valuation techniques such as discount cash flow, return on equity, EV/EBITDA, P/E, and price or book value are used to make investment decisions. Analysts use a 5S model to evaluate it in terms of sustainability, scalability, soundness of promoters, sustainable competitive advantage through strong brand promotion, and sustainability of cash flows.
The fund is fairly diversified at a stock level, with top 10 holdings constituting around 30 per cent of the portfolio. Large-caps typically account for about 20 per centof the portfolio. The fund’s long-term orientation and the manager’s style of investing in high-conviction stocks could lead to a differentiated portfolio compared with peers as well as the index. However, the investment process should hold the fund in good stead.