Mr. Manish Gunwani, CIO -Equity Investments
Reliance Mutual Fund
Manish graduated from IIT Chennai with a B.Tech and has a Post Graduate Diploma in Management from IIM Bangalore. Manish has 21 years of work experience primarily in equities spanning roles in equity research and fund management. He has also co-founded a technology company in the document management space.
During his stint at ICICI Prudential AMC, he managed two flagship funds of the mutual fund whose assets grew from $1bn to $5bn in 5 years. One of the funds grew from $50m to $3bn becoming the second largest fund in the industry. As deputy CIO he was instrumental in various aspects of asset management including setting up research processes, product strategy, developing talent of the team etc.
Manish has immense experience in equity research and has also spent two years working in a portfolio management company whose focus was midcaps. Having traveled extensively across the world, Manish has attended many global investment conferences and seminars.
Q. Give us your sense of the Indian economy today. What are the key challenges and risks facing us?
Answer: We think the Indian economy has seen two positive developments recently - the fall in crude price and inflation remaining below expectations on a consistent basis. Also, currency has depreciated significantly this year and from here on downside looks limited. Hence macro stability looks reasonably certain unless oil spikes up a lot. One key challenge for the economy is lack of healthy export growth despite our base being low - this is one of the biggest headwinds to the overall growth. Another risk is political developments in the next few months affecting sentiment.
Q. After the recent corrections in the markets, how do you see the valuations in the different market caps?
Answer: Given the correction in midcaps this year the valuation premium has narrowed meaningfully. Hence, we have a neutral view between large caps and midcaps. Overall basis valuation of midcap index is not cheap but it is skewed by stocks in the consumer space which are generally expensive.
Q. Please share with us the sectors which you are avoiding and sectors which look attractive to you.
Answer: We like large corporate lending banks, pharma, value-based stocks in segments like utilities, cement, real estate, hotels etc
Q How are the investors behaving in the present markets? How has the recent corrections impacted fund flows?
Answer: Generally domestic investors have shown heartening resilience this year as amidst volatility they have been quite consistent. We are not seeing any big impact on flows. We believe increased awareness about market linked investments and participation in a disciplined manner through Systematic Investments have contributed to matured investor behavior in face of higher volatility.
Q. What would you advice investors looking to invest into equities today?
Answer: Asset Allocation is the most important aspect of generating superior risk adjusted returns. There are lot of short term variables which is difficult to anticipate and can be managed effectively by appropriate asset allocation Given the current market volatility and upcoming geo-political events scenario investors can consider participating in staggered manner or through the systematic investment in strategies like Large Cap / Multi Cap Funds. Risk averse investors can consider hybrid products which combine equity & debt in varying proportions.
Q. Please tell us about your fund management strategy and how it has benefited equity investors in recent times?
Answer: We follow the investment philosophy of Growth at Reasonable Valuations. Our attempt is to participate in good quality structural growth businesses without overpaying for growth. In other words, we are not constrained by benchmarking bias or momentum and seek to create differentiated portfolios (within the scheme mandate) that can potentially outperform. In this endeavor, we are supported by a very experienced fund management & research team which has been through multiple cycles and is familiar with different styles of investing. In recent times our exposure to corporate banks, pharma, select cyclicals etc helped our fund’s performance.