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An experienced manager, a time-tested investment process, and fine execution of the strategy reinforce our conviction in Nippon India Multi Cap. Hence, we reaffirm a Morningstar Analyst Rating of Silver to the fund’s direct share class and Bronze to its regular share class. Where this fund has differentiated itself from peers is its manager’s resolve to manage it like a true-blue multicap offering, with investments in large- and mid/small-cap stocks being made in almost equal proportions. The is the reason why it was retained in the multi cap Morningstar Category when SEBI changed its investment mandate. As per the new investment mandate for the category, the funds therein must maintain a minimum of 25% of assets each in large-, mid-, and small-cap stocks. As for Nippon India Multi Cap, since it has traditionally followed an almost similar investment pattern, its broader framework and investment approach remains intact. Sailesh Raj Bhan has been managing this fund for 17 years now. His strong credentials and superior execution capabilities buoys confidence that the fund can keep producing top-flight results over the long term notwithstanding short-term hiccups. Bhan is an accomplished manager and has built a noteworthy long-term track record. He adopts a free-flowing and multipronged approach to stock selection here, which jells with his skillset. He scouts for issues that exhibit strong growth prospects and have healthy or rising ROEs. Bhan has a penchant for emerging/niche themes and sunshine sectors as he believes they have significant upside potential. He also invests in value propositions to balance the portfolio’s growth bias with a value tilt. Taking big sector/thematic bets also forms an integral part of the strategy.However, the strategy has some inherent risks. Investing in emerging/niche themes, which largely have untested business models and value propositions, is a risky affair. Bhan’s large sector/thematic bets are also not without risks as a failed call may result in huge underperformance for the fund. The category is also growing, with new funds being launched. Therefore, it’s important to observe how the fund stacks up against its growing peer set. We draw comfort from the fact that the process is robust with research at its core; that somewhat reduces the risk associated with investing in smaller caps and emerging/niche themes. The fund has delivered pleasing results since the category’s investment mandate has changed.
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