Swarup Mohanty: There are investors who believe there is enough talent in the industry. To back that up, active fund management is there, and active fund management is alive and kicking.
But post-Covid, there was this discussion on large caps underperforming or underperforming the index.
I believe the volatility in the large caps or the exit of FIIs from large caps has brought back the large cap into play. Mark my words on this, there is enough talent in the industry to beat the benchmark on the large cap side, which was a question mark prior to Covid.
Our house view has been simple. You cannot take away the impact of Covid on balance sheets. The larger the balance sheet, the more resilient it is. So, it is to the advantage of a large company; it is advantageous to large, automated companies post-Covid.
Our view on mid caps was very clear. Last to last March, we practically asked our partners to stop selling our mid-cap fund. There were a lot of issues and a lot of backlash to us on that part.
But look into it from the data perspective, and that’s what makes owning mid cap a little interesting. That’s where portfolio consistency comes up–when to own mid caps and when not to own mid caps.
When the near-term returns are above median, and that’s something which Feroze was referring to on the other side, one has to reflect on owning a certain asset class.
That’s what had happened to mid caps last to last March where if you look at one-year trailing on the index, people were talking about returns north of 40%, and if you look at one year later, the retail investor who came looking at that 40% return actually got 20% return. Last month, that investor was negative. Thanks to this rally, the investor is a little positive.
So, returns come in a very lumpy manner and one could probably be a little watchful on that unless you have a very long-term horizon. If you have a long-term horizon, then the right time to buy equity was yesterday. And then it’s not about investing long term, it’s about holding long term.
Sooner or later, the valuations of mid caps will start looking attractive and that’s not very far away is our house view.
But at this moment, even if you look at our portfolio, out of the Rs 100 that we manage, nearly Rs 60-64 is in large caps. And let me tell you, our mid cap track record has not been bad at all. So, that’s the only caution we had raised.
As we look at the markets today, we are very confident on our asset stock picking. We say that as long as you are within your risk profile and your asset allocation, do not flinch in allocating to equity as such in India.
India is on a structural growth path and post-Covid, our standing on data is very unique in the world. It’s about not only acknowledging that data but internalising that data.
The Indian markets will create wealth and we are very happy to see at least in the last two years, the Indian investors starting to own the Indian markets. Otherwise, it was not so.