We will have to be watchful on oil prices and inflationary pressures as the world witnesses intensified geo-political risks. Businesses that can pass on inflationary pressures to consumers should be in the consideration set.
Macro uncertainties are increasing when valuation comfort is low and in the backdrop of high past returns. Investors must consider all these 3 risks and focus on only long term investing.
Axis Multicap Fund has reported a steady 2ndquartile performance over the last 12 months. Key performance contributors include real estate, midcap IT, apparels, electronics, auto OEMs and hospitals. Detractors included chemicals and large cap IT.
The fund is large cap tilted with almost the entire discretionary 25% allocated to large caps. Shreyash believes that while smallcaps may continue to report faster growth in earnings, large caps score better on account of valuations, quality of businesses, free cash flows and sustainable RoEs.
He does not believe too much in tactical plays in the BFSI space – he focuses on owning leaders in key segments who have demonstrated capabilities to win market share at low credit cost and at good RoAs.
Quest for owning leaders also influences his stock selection in the mid and small caps spaces. Market cap is not the deciding factor, proven leadership and sound management are.