Sharing what Vinay Kulkarni, Senior Fund Manager at HDFC Asset Management Co Ltd. had to say while answering question on LiveMint in their chat section.
Attractive valuations backed by with good growth prospects for the banking stocks due to huge demand for financial products and services (driven by the high growth in the economy) both on corporate side as well as the retail side
Disciplined approach to stock picking and focus on risk mitigation through a diversified portfolio of stocks has been the key driver of fund performance
Negative on real estate sector. While the sector has long term demand drivers in place, valuations of stocks are not attractive. On telecom sector, we are underweight because of the competitive pricing pressures in the sector
Our approach is more bottom up (i.e stock specific) rather than a top down, sectoral approach. However, we were overweight on banking sector, pharma sector, IT sector and engineering sector
We are very cautious on the real estate sector and have zero exposure to this sector
Discomfort with high valuations kept us away from sectors such as real estate, power utilities and NBFCs and these sectors outperformed the market. Since HDFC TaxSaver was underweight these sector, it underperformed in 2007
By increasing disposable income in the hands of salaried class, the Budget has boosted the prospects of FMCG companies for the coming fiscal
The Budget has given a boost to consumption by increasing disposable income in the hands of the salaried class. Also the return of fiscal discipline should put a cap on inflation expectations. Government’s intent to be an enabler and ensure the right environment for private enterprise is also a boost for private sector entrpreneurs
Currently we see good prospects for banking sector led by robust credit growth in fy11, engineering and infrastructure sector based on revival of the capex cycle, IT sector as a play on global economic recovery, pharma sector based on company specific positive drivers and the fmcg sector based on the Budget which has left more disposable income in the hands of the salaried class.
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Do you agree? Does this help you with stock selections?
A question that he ignored was about index funds. The question asked was, “So does it make sense if i do my equity investment only through an index fund?”. It sure was an uncomfortable question for an active Fund Manager. As he couldn’t bring himself to say that index funds do outperform the actively managed mutual funds quite often.
In any case, it’s good to know the mind of a Fund Manager.
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