'We are advising multi-cap or large-cap strategy'

Having a robust investment framework and sticking to it across market cycles have helped Neelesh Surana deliver high risk-adjusted returns in the two funds he manages.

Surana, the chief investment officer at Mirae Asset Investment Managers (India), was awarded the Business Standard Fund Manager award in the Multi/Flexi-Cap Equity category.

Surana manages Mirae Asset Tax Saver and Mirae Asset Emerging Bluechip (co-managed by Ankit Jain) funds, which delivered returns of 64.30 per cent and 68.46 per cent, respectively, for the year ended September 30, 2021.

The funds beat their benchmark indices by over 300 basis points (bps) and about 100 bps, respectively.

He joined Mirae Asset in 2008 and, as a CIO, currently spearheads the research and fund management functions.

Surana has over 26 years of experience in equity research and portfolio management.

While Indian equities have seen a broad-based rally for the year ended September 2021, betting on businesses that capitalise on the cyclical recovery has helped Surana deliver superior returns in the category.

"The core portion of the portfolio is favouring businesses with structural growth opportunities like outsourcing, consumer-related companies, insurance, etc. Overall, we believe that superior stocks selection within sectors by the research team has led to the outperformance of the scheme," says Surana.

While the rising markets have come in handy in pushing up returns, a disciplined approach and proper framework have made all the difference in generating alpha.

"I believe that the investment framework should be tested over the long term, which is both falling and rising markets," explains Surana.

The strategy has been put to use not only in these two funds, but it has been applied at the fund house level over the past few years.

The strategy is split in two parts, one is the basic template for stock selection and other is related to portfolio construction.

In selecting stocks, the fund house buys quality businesses by looking at growth opportunity, longevity of business and the return on capital employed.

Other filters also include evaluating management and selecting stocks that are reasonably valued.

"Regarding the portfolio construct approach, we want to create a risk-adjusted portfolio and have a well-diversified portfolio to mitigate risks. The idea is to avoid big mistakes," says Surana.

Currently, both schemes have around 60 stocks in the portfolio, which explains the fund manager's thrust on diversification.

The fund house also does not believe in having divergence compared to the benchmark.

Top three sectors in both the funds managed by Surana are banks, software and pharmaceuticals.

In terms of stock holdings, both the schemes have HDFC Bank, ICICI Bank and Infosys in their top five holdings.

The markets have seen a sharp run-up in the last 18 months, particularly in the mid- and small-cap segments.

The fund stays away from smaller businesses that don't have a longer-term history and have moved up too soon.

"We are advising multi-cap or large-cap strategy at this point of time," says Surana.

Since mid-November, there has been a correction in the market, but Surana says it's a healthy consolidation and he remains constructive on Indian equities from a three to five-year time frame.

However, risks of the pandemic and high oil prices might cause near-term challenges for equities.

"From India's point of view, this is oil prices -- if for any reason oil were to remain very high for long, it would pose near-term challenges to what is otherwise a stable economic framework," signs off Surana.

Feature Presentation: Aslam Hunani/Rediff.com