SBI Magnum Income Fund
Investment Strategy
Dinesh Ahuja has been the lead portfolio manager of this fund since February 2011 and has a total experience of more than 20 years. He comes across as a skilled and experienced manager and has helped the fund build an impressive track record during his tenure.
The strategy employs a bottom-up approach combined with a top-down overlay to generate superior risk-adjusted returns. A top-down approach guides portfolio position around predetermined risk parameters by assessing gross domestic product/inflation, monetary/fiscal policy, interest rate, liquidity, yield curve, credit spread, and so on, while the intensive bottom-up credit research uses an in-house model for security selection. The managers use various qualitative and quantitative parameters and put a lot of emphasis on a 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 limits. The risk-management team periodically reviews the portfolio to ensure the managers adhere to the guidelines.
The fund typically maintains 60 per cent in accrual and remaining 40 per cent is used to generate alpha by taking duration calls based on the overall view on interest rates. Ahuja is mindful of credit risk in the portfolio and avoids investing anything below AA rated instruments.
Mirae Asset Emerging Bluechip Fund
Manager Biography And Fund Strategy
Mirae Asset Emerging Bluechip is managed by Neelesh Surana and Ankit Jain. Surana joined the fund house in 2008 and is now the equity CIO of the fund house. He has more than 20 years’ experience in equity research and portfolio management. Jain has an overall experience of 10 years. There are currently five research analysts and two equity dealers, with an average overall experience of 10 years. The investment team also leverages the expertise of the global research team.
The investment philosophy centres around high-quality businesses with good credentials. The team combines fundamental analysis with quantitative screens, seeking firms with high earnings growth potential, strong balance sheets, and high cash flow. The team also looks for price value gap in stock selection and considers metrics such as P/E, P/B, and EV/EBITDA. It further filters and invests in companies that generate EBITDA/cash flows of around `100 crore. It avoids smaller companies as the idea is not to buy in at an early stage but to invest in evolving mid-caps that have the potential to become large-caps. While selecting mid-caps, the manager typically looks for slightly higher ROE and growth rates as compared with large-cap stocks, given these stocks come with liquidity and other risks. Within the framework, a lot of emphasis is on qualitative analysis, such as management quality and execution capabilities. These are quantified by evaluating the trailing 10-year record, which helps in removing subjectivity. The team also leverages the analysis of sell-side research and expertise from a team based in Hong Kong. Meeting with company management is also vital here to gain company-specific and industry information. The strategy holds a well-diversified portfolio with a long-term perspective, helping the fund outperform over the long haul.
The fund maintains a well-diversified portfolio of 60-65 stocks. The manager avoids compromising on liquidity; hence, with the fund’s increasing size. It is closed for lump-sum investments and has also restricted investments through SIP. The fund remains fully invested and avoids churning the portfolio often, which is reflected in the fund’s lower turnover ratio relative to peers.