Ajay Tyagi, Head of Equity, UTI AMC, who has been ranked among the top money managers for helping investors build wealth with a firm eye on risk basisthe studylooks at the five-year track record of equity schemes and identifies the best performers across multi-cap category on the basis of risk-adjusted returns. Mr. Tyagi believes that investing philosophy rests on two pillars—buying businesses that create economic value and growing it sustainably. It takes a lot of conviction to stay true to this path. The real test of a business’s character is when the chips are down and that is why fund manager emphasizes on companies with strong track record of profitability, ability to defend market share and cash flow generation across cycles. Concentration within portfolio is like a fair-weather friend.However, does not like to over-diversify either. No matter how good one is at stock picking, some company-specific blunders are bound to happen. Markets are never at fair value but firmly believes that so long as one is riding the right kind of businesses, the value creation will eventually catch up.
For the consistent performance of UTI Flexi Cap fund, Mr. Tyagi said “We follow a bottom up approach to portfolio construction. We don’t churn our portfolio much and hold investments for fairly long periods. We have been and continue to remain bullish on businesses in the healthcare, consumption, private banks and information technology sectors.” This scheme bets on Financial Services, Consumer Cyclical and Healthcare along with the top three stock picks i.e., Bajaj Finance, HDFC Bank and L&T Infotech.
According to the fund manager, markets are pricing in a strong revival in earnings in the near future and some of it is reflecting in the strength shown by businesses. Management commentary continues to be optimistic and consumer sentiment has been holding up well. The demand trajectory over the coming months remains an important factor to be monitored as India will gradually enter a festival period which has historically seen pick-up in consumption. This is particularly important as valuations are about 20% higher than average and hence any disappointment in earnings growth can lead to derating.
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