IDFC Bond Medium Term Fund

Investment Strategy

Suyash Choudhary returned to helm this fund in September 2015, having previously run it from December 2011 to July 2013. Choudhary is an accomplished and a seasoned manager. His strength lies in his in-depth understanding of the macroeconomic environment, as well as his ability to anticipate interest rate movements and identify attractive investment opportunities across market segments.

Safety, liquidity, and fundamental research are the hallmarks of the strategy plied here. The fund is a part of the medium-duration category, where the investment mandate is to maintain the fund’s Macaulay duration between three and four years. Additionally, investments are made only in AAA-rated and highly liquid corporate bonds or government securities. Hence, neither the credit nor active duration bets are part of the investment approach. For investments in corporate bonds, the team lays a lot of emphasis on the promoter group, its track record, and corporate governance standards. Suyash will not lend to a company facing corporate governance issues. Additionally, he looks at a company’s competitive standing vis-à-vis peers, its practices, cash flows, liquidity profile, business, and financial risks, among others. The strategy of not taking credit risk differentiates it within the category, where several peers adopt a credit-oriented investment approach. In effect, this strategy is apt for investors who don’t have an appetite for credit risk.

Suyash constructs the portfolio with a fluid investment style by investing in a mix of high-quality corporate bonds, money market instruments, and government securities. The allocation between them is decided after studying the bond spreads, liquidity, and relative valuations.

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Mirae Asset Large Cap Fund

Manager Biography And Fund Strategy

Fund Manager Gaurav Misra has over two decades of experience, and his thought process and investment approach are well aligned with the strategy of the fund. Harshad Borawake supports Misra as the fund’s co-manager. The team is supported by three research analysts and two dealers, with an average experience of 10 years.

The investment philosophy of the fund is built on three core principles: quality businesses with stable earnings, strong management, and attractive valuation. The process includes both quantitative and qualitative stock screening with bottom-up stock-picking. The sector selection is done through a top-down approach mainly based on growth prospects. Analysts then assess stocks at the industry and company levels and focus on key drivers such as returns on capital employed, returns on equity, and EBITDA margin. Within the framework, there is a lot of emphasis on qualitative analyses like management quality and execution capabilities. These are quantified by evaluating the trailing 10-year track record, which helps in removing subjectivity. There is a further focus on valuation, which becomes a key driver behind entry and exit timing. This valuation process along with quantitative factors drive the conviction level in the stock, which helps exclude companies whose business fundamentals are not solid.

The strategy of the fund is to invest across sectors and themes. The fund has traditionally held a significant stake of around 80 per cent in large size companies, focusing primarily on high-growth stocks. The portfolio manager is willing to ride through periods of adversity and stick to his long-term views. Turnover is lower than the category average. Taking cash calls is not part of the strategy and alpha is generated mainly through stock selection rather than sector rotation.