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Nippon India Flexicap Fund has turned in a strong top quartile performance, driven largely by stock calls rather than significant sector calls. The portfolio is a mix of sector leading compounders as well as turnaround stocks and new age plays. Infra and real estate stocks aided alpha generation, as did staying underweight on global cyclicals and consumer staples.
The fund has moderated its small and midcap exposure from50% to 35%, with large caps going up from 50% to 65% in recognition of the steep run up in smaller stocks and relative attractiveness of large caps. The fund’s large cap holdings will typically move within the 50% to 65% band.
While market valuations have gone up sharply, Meenakshi takes comfort from earnings growth, continued strong appetite from retail investors and growing appetite from FIIs as they look at EMs ex China.
Meenakshi sees alpha going forward from valuation arbitrage plays. There are number of domestic focused stocks and sectors with strong growth outlook but which trade at significant valuation discounts to others playing the same broad macro theme. These represent good opportunities for discerning stock pickers.
