MUMBAI: Diversification is every fund manager’s mantra for generating decent returns while keeping risks to the minimum. But Apoorva Shah of DSP BlackRock Investment Managers seems to have taken the rule a bit too seriously, say his peers. Not many Indian money managers have the stomach to hold over 80 stocks in one portfolio , churn large-cap stocks and hold volatile mid-caps over a longer term, they say.
This strategy has misfired only once, when the market bounced back in March 2009 and just like the captain of the Titanic, Mr Shah could not change course quickly enough, because of sheer size.
But it took just about 20 days for Mr Shah to realign his portfolio with a surging market at that time. The absence of realty stocks, however, dragged his overall returns for some time. This experience has taught Mr Shah a valuable lesson — to remain in good stocks in trying times and hold some cash that can be deployed better when the market changes direction.
“We like to be in quality companies when environment is not very favourable,” said Apoorva Shah, executive vice-president & equities fund manager, DSP BlackRock Mutual Fund, which manages equity assets worth . 14,642 crore.
“Looking at problems in the Eurozone and a likely slowdown in India, we’ve become slightly defensive in our approach. We are holding some amount of cash at this point of time,” Mr Shah, who manages DSPBR Equity Fund, DSPBR Top 100, DSPBR Technology Fund, DSPBR Small & Mid Cap Fund, DSPBR Microcap Fund and DSPBR Focus 25 Fund, told ET in an interview.
Mr Shah says that 2011 will be a year of modest returns, compared with what investors made in 2009-10 . The market will grow in line with the corporate earnings rate, adds Mr Shah, who expects the top 100 companies to report a 15-20 % growth.
“We expect the market to remain flattish — 5% up or down — for some time. I’ll not rule out the possibly of a 10% correction, because the market is overbought ,” he says.
Slowdown in industrial production is a worrying factor, according to Mr Shah. Companies’ operating margins have been affected by rising interest rates, fuel costs and raw material costs.
The market will assess the impact of this slowdown in the current quarter, the results for which will start trickling in the next month. Mr Shah is not expectingan ‘unmanageable’crisis .
But some sectors, like construction , infra, engineering & manufacturing and capital goods, could be impacted by the slowdown. He doesn’t discount the possibility of the RBI cutting rates to spur growth in the coming months.
“Investors will want to see if there is a slowdown in real terms. The third quarter will decide the onward course of the market,” Mr Shah adds. The recent spate of scams and investigations into financial market and banking irregularities could influence the overall market sentiment, he adds.
“For sure, such scams are not exclusive to India. But if it stays on and creates uncertainty about the corporate sector, it will affect FII sentiment,” he says. According to Mr Shah, investors have been rational with their investments this time.
This strategy has misfired only once, when the market bounced back in March 2009 and just like the captain of the Titanic, Mr Shah could not change course quickly enough, because of sheer size.
But it took just about 20 days for Mr Shah to realign his portfolio with a surging market at that time. The absence of realty stocks, however, dragged his overall returns for some time. This experience has taught Mr Shah a valuable lesson — to remain in good stocks in trying times and hold some cash that can be deployed better when the market changes direction.
“We like to be in quality companies when environment is not very favourable,” said Apoorva Shah, executive vice-president & equities fund manager, DSP BlackRock Mutual Fund, which manages equity assets worth . 14,642 crore.
“Looking at problems in the Eurozone and a likely slowdown in India, we’ve become slightly defensive in our approach. We are holding some amount of cash at this point of time,” Mr Shah, who manages DSPBR Equity Fund, DSPBR Top 100, DSPBR Technology Fund, DSPBR Small & Mid Cap Fund, DSPBR Microcap Fund and DSPBR Focus 25 Fund, told ET in an interview.
Mr Shah says that 2011 will be a year of modest returns, compared with what investors made in 2009-10 . The market will grow in line with the corporate earnings rate, adds Mr Shah, who expects the top 100 companies to report a 15-20 % growth.
“We expect the market to remain flattish — 5% up or down — for some time. I’ll not rule out the possibly of a 10% correction, because the market is overbought ,” he says.
Slowdown in industrial production is a worrying factor, according to Mr Shah. Companies’ operating margins have been affected by rising interest rates, fuel costs and raw material costs.
The market will assess the impact of this slowdown in the current quarter, the results for which will start trickling in the next month. Mr Shah is not expectingan ‘unmanageable’crisis .
But some sectors, like construction , infra, engineering & manufacturing and capital goods, could be impacted by the slowdown. He doesn’t discount the possibility of the RBI cutting rates to spur growth in the coming months.
“Investors will want to see if there is a slowdown in real terms. The third quarter will decide the onward course of the market,” Mr Shah adds. The recent spate of scams and investigations into financial market and banking irregularities could influence the overall market sentiment, he adds.
“For sure, such scams are not exclusive to India. But if it stays on and creates uncertainty about the corporate sector, it will affect FII sentiment,” he says. According to Mr Shah, investors have been rational with their investments this time.
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