‘Making mistakes is part of investing’

Apr 03, 2019
Soumendra Nath Lahiri, chief investment officer at L&T Mutual Fund, shares his thoughts on what helped the fund house win the Morningstar Best Fund House Award 2019 (Equity) for the second year in a row.

Congratulations on winning the Best Fund House – Equity Award for the second consecutive year. What has helped you build this impressive track record? How do you plan to sustain it?

At L&T Mutual Fund, we follow a proprietary investment process-G.E.M model. It involves Idea Generation, Evaluation, and Manufacturing & Monitoring of portfolio. Our research team rigorously examines an investment opportunity based on multiple parameters such as management track record, corporate governance, growth prospects, valuations, etc. before considering for inclusion in the portfolio. Furthermore, the risk-management function plays a critical role in highlighting key portfolio risks and defines limits in terms of the maximum holding that they can have in a company.

Which themes are you focusing on in 2019?

Recent correction in the equity market has provided attractive entry points for quality mid and small cap companies available at cheap valuations. We are looking at infrastructure sector which has seen considerable order book accretion especially from the state governments with strong execution so far. However, a clear trend in sector leadership will be visible only post general elections. We also expect the consumption theme to improve amid stable wages and economic recovery in CY2019.

Which are the three most important skills to be a successful fund manager?

  1. Patience - Strong convictions in stock picks despite market rumours.
  2. Confidence and courage in backing your own convictions.
  3. Observant/perceptive - Observation is more important in equity research than years of accumulated academic knowledge.

In your fund management career, what have been your notable mistakes? Which mistakes would you have liked to avoid?

There are many mistakes I would like to avoid. Among them is buying too early or selling too late. Getting my valuations spot-on is also among one of the wishes instead of working with approximation.

Making mistakes is part of investing but far more important is making less mistakes. I have had my share too and learning from them.

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