Wealth Company’s new multicap fund will not just be multicap but will also be multi style and will actively use derivatives (within the ambit of MF regulations) not just as a hedge but as an alpha source.
Chinmay cautions against the Growth At Any Price (GAAP) phenomenon that one is seeing across some growth stocks. His team adopts a rigorous discounted cash flow valuation methodology to determine fair value of stocks. PE and PEG, he says, are no longer representative of fair value – DCF is the mantra that matters.
He is also a firm believer in a multi style approach. Based on the current and evolving market scenario, he assigns target weights to value, growth and momentum buckets in his portfolio. Being wedded to a particular style is an unnecessary risk that investors should not be exposed to.
Based on theme/sector weights and style weights, the portfolio is cast. The new multicap fund may have around 40 stocks and will have some high conviction sizeable bets at the top of the portfolio, with perhaps a longish tail at the bottom.
He does not subscribe to consensus view on banks – he says their business models are such that RoEs get capped around 15%, which means they make sense only at cycle bottoms.
He will look at IT services as a tactical bounce opportunity to trade, not as a position to hold in the portfolio.
He likes healthcare, select industrials, the power ecosystem and consumer services platforms while being bearish on FMCG.
His team of data science oriented analysts provide data intensive insights not just for regular portfolio construction but also for tactical derivative plays as an active alpha source.