ABSL Flexicap Fund completes 25 years of wealth creation, joining a select band of silver jubilee funds that collectively demonstrate the power of compounding from actively managed equity funds across market cycles.
Under Harish’s stewardship over the last 18-20 months, the fund has moved up from 2nd quartile to top quartile over 6 mth and 1 yr time horizons.
His “best of breed” investing approach when applied to business cycles in each sector, enables him to identify good companies at turning points in their respective cycles, which gives him margin of safety at entry and enables a patient approach while the cycle plays out.
He entered the year with an underweight stance on FMCG, PSUs and real estate and then added capital goods to this list during the year. IT on the other hand has gone up from neutral to meaningful overweight.
Harish and his team have identified 9 sectors that have underperformed over the last 9-10 years – some of which will likely be winners of the coming decade. These include private sector banks, IT services, metals, cement, oil & gas, chemicals, alcobev etc.
ABSL Flexicap Fund has 57% allocation to these 9 sectors vs around 41% as the peer group average.
Harish is moving FMCG from underweight to dark horse as companies are now taking the long view of building volumes by sacrificing margins. FMCG profits as % of overall corporate profits is now down to its 2010 lows, which gives some margin of safety for considering long term investment.
While macro fundamentals remain strong and fiscal and monetary policies are growth-conducive, the big worry for markets is the relentless supply of paper flooding the markets – which at 2% of market cap is the highest it has ever been.
With US trade uncertainties and massive supply of paper restraining what could otherwise have been a growth inducing policy driven rally, might well turn out into a grinding market with an upward bias.