India's best equity fund manager R Srinivasan on how to strike success
Data-driven decisions win the day. Personal style and individual calls have nothing to do with it, says R. Srinivasan, this year's Best Equity Fund Manager.
SBI Mutual Fund Equities head R. Srinivasan. PHOTO: Rachit Goswami
The Best Equity Fund Manager in this year's BT-Value Research ranking is a modest man unwilling to take credit for his funds' stellar performance. "We don't believe that the fund manager is some super animal," says R. Srinivasan, 40, Head of Equities at SBI Mutual Fund.
"We don't say, Tu kar le yaar, tu toh star hai! (You do it, you're the star!)" Instead, he credits his funds' solid performance to the focus on quality companies and their fundamentals. Srinivasan oversees equity assets worth nearly Rs 16,000 crore.
But much of the credit must go to the fund manager. The performance of SBI Mutual Fund's equity schemes has picked up since he came on board in mid-2009. Two of his funds, Magnum Emerging Businesses Fund and Magnum Global Fund, figure among the top three in the Aggressive Growth category of the BT-Value Research ranking. These funds also have a five-star rating from Value Research.
Srinivasan insists that each of the three funds managed by him have clearly defined risk constraints. Those three funds - Magnum Emerging Businesses Fund, Magnum Global Fund and Magnum Equity Fund - figure in the top quartile of their respective groups. Essentially, they have provided the highest returns more often than their peers.
"All the SBI funds suffered a setback two years ago when their fund manager left. But after Srinivasan joined there has been a good pick-up in the funds," says Sanjay Matai, a financial planner based in Pune.
Srinivasan is known in mutual fund circles for his mid-cap and small-cap stock picking skills. Page Industries, one of the key picks for the Magnum Emerging Businesses Fund, was not very attractive in terms of valuation. But its growth was way ahead of the SBI team's estimates.
The company has the exclusive licence to manufacture and distribute the Jockey brand of innerwear in India, Sri Lanka, Bangladesh, Nepal and UAE. It recently posted 27 per cent growth in net profit for the quarter ended December, compared to the year-ago period. The stock has appreciated 70 per cent over the last one year.
"If you look at quality, not just in India but across emerging markets, companies that have good balance sheets have outperformed those with bad balance sheets. That trend has helped us across funds," says Srinivasan.
"He (Srinivasan) has a good grip on company fundamentals and a deep understanding of the companies and sectors we are invested in," says Navneet Munot, Chief Investment Officer of SBI Mutual Fund.
For Magnum Global, one of the star performers was Redington India. The fund backed it on the basis of its 30 per cent share of the distribution market for IT, telecom and consumer durables.
And also because of its ability to deliver consistent returns despite distribution being a low-margin business. As of January, five per cent of Magnum Global Fund's assets under management (AUM) were invested in this company. The stock has risen 14 per cent over the past year.
The fund house ensures that investors are fully aware that each product comes with a certain risk. For example, Magnum Equity Fund, with AUM of Rs 452 crore as of January 31, is a large-cap fund that invests only in the top 100 companies.
Magnum Global, with AUM of Rs 899 crore as of January 31, is a largely mid-cap fund that focuses on quality, so the inherent risk is less. And, Magnum Emerging Businesses Fund, with an AUM of Rs 456 crore as of January 31, is the only fund that has a high-risk, high-return approach. The fund has clicked because of good stock selection.
Clearly, Srinivasan is a modest man with not much to be modest about.
"We don't say, Tu kar le yaar, tu toh star hai! (You do it, you're the star!)" Instead, he credits his funds' solid performance to the focus on quality companies and their fundamentals. Srinivasan oversees equity assets worth nearly Rs 16,000 crore.
But much of the credit must go to the fund manager. The performance of SBI Mutual Fund's equity schemes has picked up since he came on board in mid-2009. Two of his funds, Magnum Emerging Businesses Fund and Magnum Global Fund, figure among the top three in the Aggressive Growth category of the BT-Value Research ranking. These funds also have a five-star rating from Value Research.
Srinivasan insists that each of the three funds managed by him have clearly defined risk constraints. Those three funds - Magnum Emerging Businesses Fund, Magnum Global Fund and Magnum Equity Fund - figure in the top quartile of their respective groups. Essentially, they have provided the highest returns more often than their peers.
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Srinivasan is known in mutual fund circles for his mid-cap and small-cap stock picking skills. Page Industries, one of the key picks for the Magnum Emerging Businesses Fund, was not very attractive in terms of valuation. But its growth was way ahead of the SBI team's estimates.
The company has the exclusive licence to manufacture and distribute the Jockey brand of innerwear in India, Sri Lanka, Bangladesh, Nepal and UAE. It recently posted 27 per cent growth in net profit for the quarter ended December, compared to the year-ago period. The stock has appreciated 70 per cent over the last one year.
"If you look at quality, not just in India but across emerging markets, companies that have good balance sheets have outperformed those with bad balance sheets. That trend has helped us across funds," says Srinivasan.
"He (Srinivasan) has a good grip on company fundamentals and a deep understanding of the companies and sectors we are invested in," says Navneet Munot, Chief Investment Officer of SBI Mutual Fund.
For Magnum Global, one of the star performers was Redington India. The fund backed it on the basis of its 30 per cent share of the distribution market for IT, telecom and consumer durables.
And also because of its ability to deliver consistent returns despite distribution being a low-margin business. As of January, five per cent of Magnum Global Fund's assets under management (AUM) were invested in this company. The stock has risen 14 per cent over the past year.
The fund house ensures that investors are fully aware that each product comes with a certain risk. For example, Magnum Equity Fund, with AUM of Rs 452 crore as of January 31, is a large-cap fund that invests only in the top 100 companies.
Magnum Global, with AUM of Rs 899 crore as of January 31, is a largely mid-cap fund that focuses on quality, so the inherent risk is less. And, Magnum Emerging Businesses Fund, with an AUM of Rs 456 crore as of January 31, is the only fund that has a high-risk, high-return approach. The fund has clicked because of good stock selection.
Clearly, Srinivasan is a modest man with not much to be modest about.
