The fund continues to hold its long-term appeal with a high calibre team and an impressive investment process.
- Category: Large and Mid Cap
The fund traditionally has been mid-cap-oriented, but since 2018 has been positioned as a large- and mid-cap fund. However, there has not been any significant change in the fundamental attribute of the fund. Since inception, the fund has maintained a 30-40% allocation to large-caps, and now with the new benchmark, it has gone up to 50-60%.
- Fund Managers: Neelesh Surana and Ankit Jain
Neelesh Surana is the CIO and has distinguished himself with his bottom-up, research-intensive stock picking approach.
Ankit Jain has been co-managing this fund since 2019 and manages the mid-cap holdings. We think Ankit is a capable manager and is well engrained under Surana’s supervision.
Both the portfolio managers are aided by a relatively stable and experienced investment team. The fund house has also been strengthening the team by adding some senior and experienced resources.
- Morningstar Analyst Rating: Gold
The team uses a long-standing process that relies on proprietary models and research. Quantitative screening and fundamental analysis identifies undervalued businesses with strong balance sheets, high earnings growth, and free cash flows. They delve further to comprehend the fundamentals of a sustainable business mode, with an eye towards holding a company for the long term.
While selecting mid-cap stocks, the fund manager typically looks for slightly higher ROE and growth rates as compared with large-cap stocks, given these stocks come with liquidity and other risks. Within the framework, a lot of emphasis is on qualitative analysis, such as management quality and execution capabilities.
The portfolio managers target to have a 50-50 (+/- 10%) allocation towards mid caps and large caps. They maintain a well-diversified portfolio of about 65-70 stocks. They also avoid compromising on liquidity; hence, with the fund's increasing size, it is closed for lump-sum investments and has also restricted investments through SIP once a month with an upper cap of Rs 2,500.
The fund was launched in the bear market of 2010. Despite this, the fund outperformed its category peers across time frames with a wide margin. The distinctive stock-picking ability and skilled execution are the defining factors which have contributed to the fund’s outstanding risk adjusted return. The fund may underperform on a short-term basis, but this doesn't invalidate its effectiveness; it has the potential to outperform its peers over a full market cycle.
Currently the fund has a bias for sectors such as financials, consumer cyclical and industrials.
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