1

SBI Dynamic Bond

Investment Strategy

Dinesh Ahuja has been the lead portfolio manager of this fund since February 2011 and has a total experience of over 20 years, with 13 years’ in fixed-income fund management. The fund follows a disciplined and risk conscious investment process that draws extensively from the in-depth expertise of the investment team.

The fund is driven by a flexible mandate to move across the segment with an active-duration strategy. It employs a bottom-up investment approach combined with a top-down overlay to generate superior risk-adjusted returns. A top-down approach guides portfolio position around the predetermined risk parameters by assessing gross domestic product or inflation, fiscal policy, interest rate, liquidity, yield curve and credit spread, and so on, while the intensive bottom-up credit research uses an in-house model for security selection. They use various qualitative and quantitative parameters and emphasise the company’s management, business, and financial health. They also use the analysis of sell-side research and credit-rating agencies to form a view on the creditworthiness of companies, but to a limited extent. The credit committee then reviews the rated securities, and the approved securities are assigned credit and tenor limit. The risk-management team also periodically reviews the portfolio to ensure that managers adhere to  the guidelines.

It primarily invests in government securities, state development loans, public sector undertaking AAA bonds, and a few non-banking financial companies with quality names.

 2

HDFC Top 100 Fund

Manager Biography And Fund Strategy

Prashant Jain is an extremely skilled and experienced investor who has one of the longest track records in the Indian mutual fund industry. Jain has a big influence on HDFC AMC’s investment strategy in his role as CIO, which is highly positive.The analyst team comprises seven members with an average experience of 16 years.

The process is solid with research at its core. Prashant Jain adopts a hands-on approach to research, to ferret out quality companies with robust business models, clean balance sheets, and competitive strengths. He adopts a research-intensive approach to get an in-depth understanding of the business. Although the bottom-up style is clearly integral to Jain’s investment style, the top-down is not ignored either. Hence, the style can be described as a mix of top-down and bottom-up, with the latter being a tad bit more important. Both relative and absolute valuation methods are used to pick stocks. Still, he does not shy away from taking underweight or overweight positions at sector level when he spots opportunities. Analysts rate stocks from their sectors based on their estimates of intrinsic value. A history of ratings is maintained with the reasons for changing ratings. This helps in introspection and constant evaluation of the process. Recommendations are made with a two-to-three-year horizon, but it isn’t uncommon for stocks to feature in the portfolio for significantly longer periods. The investment style can be described broadly as growth at a reasonable price.

Although Prashant Jain is mindful of benchmark weights and invests largely in IISL Nifty 100 stocks, that is not to suggest that he is a closet indexer. He takes significant exposure versus the benchmark on stocks and sectors to deliver outperformance.

3

L&T Equity Fund

Manager Biography And Fund Strategy

The fund is managed by CIO Soumendra Nath Lahiri, who has more than 20 years of experience on the investment side and has been managing or advising on portfolios for 10-plus years.

Lahiri follows a bottom-up, benchmark-agnostic investment approach focused on investing in companies that are efficient allocators of capital. Thus, ROCE is one of the critical parameters used for evaluation.

He considers DCF valuations along with P/E, EV/EBDITA, and P/BV as key parameters while evaluating stocks and considers relative valuations within the industry to find companies that are trading at reasonable valuations. Analysts track a core list of about 300 companies that are evaluated on the basis of business, management, and valuations. The analysts derive price targets for the stocks and also run sector-neutral portfolios for the sectors, which serve as guides to the fund manager while investing. A benchmark-agnostic approach may result in large overweight or underweight positions relative to the benchmark. Furthermore, the fund house can hold a significant portion of a company as a whole. The risk management function plays a critical role in highlighting key portfolio risks and defines limits of the maximum holding they can have in a company.

Being the CIO, Lahiri prefers running portfolios of 50-60 stocks and mitigates concentration risk by maintaining a maximum individual stock exposure of about 6 to7 per cent. Lahiri’s focus lies in identifying companies with high-quality managements and growth rates that exceed the industry average over the long term. He looks at the competitive structure of the industry, entry barriers, regulatory environment and growth opportunities for the company within the sector while scouting for opportunities.