We see many fund manager awards and fund rankings in our market. But this one is something different - something special. In Citywire's global list of top 1000 fund managers from across the world, only one Indian made it into the coveted top 50 slot - and he is a relatively less feted and less celebrated, yet highly successful manager - Ajay Garg of Birla Sun Life MF, who manages the BSL MNC Fund. His MNC Fund has been adjudged by Citywire as the best Indian equity fund for 36 and 60 months periods, for the period ended Dec 2012. Ajay talks about what drove this winning performance, how he is positioning it to continue its winning ways and also clears some popular misconceptions about his MNC Fund.

Here are the facts

WF : What are some of the factors that you believe led to your achieving this huge milestone of being the only Indian fund manager in the top 50 of Citywire's Top 1000 fund managers for your performance in the BSL MNC Fund?

Ajay : Our uncompromising focus on quality with a long term point of view has paid off in a big way. Through Birla Sun Life MNC Fund, we invest in securities of multinational companies through a research based investment approach to achieve long term growth of capital with moderate levels of risk.

Among some of the factors that helped are a disciplined approach while investing and most importantly - focused stock picking where the philosophy is to invest into companies promoted and managed by Global Majors, with presence across Emerging to Developed nations.

In addition to having the necessary and relevant experience to work in a country like ours, these companies also have wide range of products that are time tested and proven for various markets. So in a difficult environment (like we've had in the recent past), these companies already knew what works by being present for multi-decades in different Geographies and different times.

Furthermore, these companies are rarely leveraged, in fact they have cash surpluses earning interest rather than paying interest in recessionary times like this. In other words in the past few years, as strong companies became stronger and the weak ones got weaker, performance of these MNC companies led to a great combination of PE re-rating and much-above average earnings growth, enabling our MNC Fund to this milestone. In short, our Fund invests in companies who have essentially been the Masters of Business.

WF : Is the MNC Fund more a consumption oriented play or is it more broadly diversified into other themes like infrastructure as well? Would you categorize it more as a thematic fund or a diversified equity fund?

Ajay : Contrary to the general perception, the BSL MNC Fund is not a sector fund or a thematic fund but it is a well diversified Equity Fund with investments across sectors and stocks chosen on the basis of Merit. The fund has exposure to over 15 sectors including FMCG, Banking and Finance, Pharma, Auto, Industrials, Materials, Oil & Gas and IT to name a few.

WF : There have been a lot of corporate actions around delisting etc in the MNC space, which have probably aided value unlocking. Do you see this as a sustainable trend or a one-off development?

Ajay : To answer your question, corporate actions around delisting in the MNC space leading to value unlocking is more of an one-off event where the intention of MNC companies remains to retain more than 75% control.

The government had made it mandatory for all listed companies to have a minimum 25% public holding. Listed companies with less than 25% public holding are required to either reach the stipulated level by enhancing their public holding, or buy back its stocks and delist the company, for which SEBI has set a deadline of June 2013.

Though the promoters of MNCs like Levers, Bosch, ABB, Alfa Laval, Pfizer, Nestle, GSK Consumer, CRISIL, among others have been looking to steadily increase their stake through buy-back/open offer of shares at a substantially high premium to market price, as they understand what returns India as a country offers to them. At the same time, there have been a couple of companies like Wabco, Blue Dart, Honeywell, who only to comply with SEBI guidelines, have completed offer for sale to bring the public holding to 25% as the delisting premium the company has to pay in India is in significant. The objective of both these set of companies had been to have the Promoter stake closer to 75%.

In the short-term this can impact stock prices. However on a sustained basis, stocks of both these set of companies have performed based on the organizations' performance that has been really great.

WF : What is your outlook on markets and sectors and how are you positioning your BSL MNC Fund in this context?

Ajay : The environment is still a little challenging and stocks will perform more or less in line with earnings growth. MNCs which are focused and experienced, from even the stressed sectors should continue to do well.

BSL MNC fund continues to be a diversified fund with investment across sectors in quality stocks where the stocks are chosen based on their individual merit that can help the fund outperform broader market during both good and bad times, and make it a Fund for all seasons.

Contrary to the expectation, the MNC investment universe is expected to expand as many MNCs are looking to enter India, rather than shrink on a net basis due to delisting of a few. Opening up of FDI will increase the investment universe as retailing stocks, Insurance, media and airline stocks can be added on merit basis.