Kotak MF first to lift curbs on investing in small-cap fund following elections, earnings growth Jain was chief investment officer at HDFC AMC from 2004 to 2022. He managed the HDFC Balanced Advantage Fund (earlier known as HDFC Prudence Fund), a hybrid equity fund, for 28 years (1994 to 2022).
In the letter to investors, he said 3P India Equity Fund 1 expects equities to deliver a 12% compound annual growth rate (CAGR) over the long term. The rationale is that the current multiples are 12% and 23% higher than the 10-year and 15-year averages, respectively.
He added, “While these multiples are supported by improved growth prospects, lower cost of capital, and lower volatility in the markets driven by higher domestic flows, there is limited room for these to expand." The letter went on to say the risk-reward ratio in the manufacturing and defence sectors is unfavourable due to the significant outperformance and sharp multiple expansion they have already seen. For context, the Nifty Defense index has almost doubled this year while the Nifty Manufacturing index is up 35%, according to Bloomberg data.
“Sale of stakes by MNC parents in Indian arms (Whirlpool 24%, Timken 10%, and ZF 7.5%), despite strong business fundamentals and growth prospects, is also supportive of this view," read the letter. Also read: Is the zero-brokerage era nearing its end? The asset manager is overweight on consumer discretionary, financials, healthcare, industrials & utilities, and underweight on consumer staples, IT, materials, and oil and gas.
It looks to invest in companies that have leadership/strong positions and will be able to maintain their market share. Last quarter, the fund invested in the IPO of Ixigo (Le Travenues Technology), which
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