How I built my equity portfolio

By Nehal Meshram |  08-12-20 | 
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About the Author
Nehal Meshram, Senior Research Analyst at Morningstar. She would like to hear from you, but cannot give financial advice.

As a fund analyst, it is my job to analyze the various schemes available. Here I share my views briefly on how I have put my expertise to use in my personal decisions.

The bedrock of my equity portfolio

Before I selected my funds, I considered how I would like my portfolio structured. I would want funds that complement each other, not compete. So based on my investing philosophy, I would naturally have to diversify by way of market capitalization, asset management company and asset class.

The fund selection

Once I got clarity on what I want, I proceeded to pick up the funds. I looked at the longevity of the fund management team, style discipline and investment process. Style discipline is extremely crucial to me because I was narrowing down on funds that must complement each other. If they deviated from their stated investing style, that would throw my portfolio out of balance.

The funds

This is a large-cap fund. Despite frequent portfolio manager changes, this fund has a strong foundation. A stable investment team, efficient execution of strategy, a well-diversified portfolio with a low turnover, and a strong quality bias.

This large and mid-cap fund has a long record of excellence. It has been stable in terms of its fund leadership and sticking to a research-oriented process. Neelesh Surana has been with this fund since its inception.

This is obviously for tax-saving under Section  80C of the Income Tax Act. There is a quality bias and a strong eye on valuations when making stock purchases, so sectors that are currently out of favour may be invested into. The fund manager has recently changed so I'm keeping a close eye on the performance.

This was a large-cap fund that got merged with UTI Bluechip. It is now a multi-cap fund. This is one of the oldest funds in the industry that traces its inception way back to 1992. After Anoop Bhaskar resigned in 2015, Ajay Tyagi took over. While he started on a shaky note, the performance has definitely improved and I am impressed with his distinctive long-term investment style.

As the name suggests, this is a multi-asset fund. The fund invests a minimum 10% in three asset classes: equity, debt, and gold (or REITs). I like Sankaran Naren’s research-based approach which is a mix of top-down and bottom-up, which is essential for a multi-asset investment.

How I view performance

No fund manager has cracked the code of consistently outperforming peers year after year. In the face of continued volatility, these funds too have faced headwinds. Funds with a value tilt (ICICI Prudential Multi Asset and Mirae Asset Emerging Bluechip) require significant patience, as value stocks can underperform growth stocks for lengthy periods.

I believe in staying invested and not paying attention to short-term fluctuations. I would be concerned only if there is a change in the investment strategy or fund manager.

A word of caution.

None of the funds mentioned are recommendations.

This information is for educational purposes only and should not be taken as Morningstar’s research team or its analysts providing you with personalized investment advice.

Investors must exercise their own independent judgment when reviewing investment products and strategies in light of their own objectives, experience, and financial position. Please consult with your own financial professional before making investment decisions.

Disclaimer: © 2020 Morningstar. All rights reserved. The Morningstar name is a registered trademark of Morningstar, Inc. in India and other jurisdictions. Research on securities, referred to for the purpose of this document as “Investment Research”, is issued by Morningstar Investment Adviser India Private Limited, which is registered with SEBI as an Investment Adviser (Registration number INA000001357), providing investment advice and research, and as a Portfolio Manager (Registration number INP000006156). Complete disclaimers here.

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Dinesh Shirvaikar
Dec 11 2020 05:12 PM
 Post SEBI's MF re-categorization why do you want to invest in a Large Cap fund like ICICI Pru Bluechip? Would Index funds not be a better option? We have seen that Large Caps as a category are failing to beat Index returns consistently over the last 2-3 years.
Would Index or Index+ funds from ICICI stable not be a better option than Bluechip funds at this time?
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