Bandhan Midcap Fund has turned in a top quartile 1 yr performance in what has been a challenging period. Ritu attributes this performance to sticking with her high conviction themes, which include manufacturing, energy transition and the broader power eco system, healthcare and consumer platforms.
She reminds us that midcaps have a strong and long history of delivering the best absolute as well as risk adjusted returns over the long term compared to other cap segments – which therefore makes a strong case for investors to own good actively managed midcap funds.
Though midcap valuations (PE as well as PEG) are higher than large and small caps, she believes these valuations are warranted given the quality and sustainability of earnings growth seen in this segment.
In capital goods – her largest overweight position – she has started selectively trimming positions in stocks where valuations are now pricing earnings too far into the future.
Financials – which was her largest underweight – has seen the maximum increase in allocations over the last 1 year as she has added good quality banks that are reasonably valued and have growth tailwinds. Despite this, per portfolio remains a bit underweight financials – as she continues to see more attractive growth opportunities in other sectors.
Healthcare is a key overweight in her portfolio – she is bullish on CDMO, on hospitals and on select domestic pharma businesses. She is less enthusiastic about generic exports.
She is generally wary about commodity stocks (oil,metals) where price – which is governed by global factors – is the key variable rather than management quality and management decisions.