Ashish Ranawade, an Electronics engineer, has also completed Master of Management Studies (Finance). He has over 19 years of experience in fund management. At present, Mr. Ranawade is working with Union KBC Asset Management Company Private Limited as Chief Investment Officer.

Besides the Tax Saver Scheme has a higher proportion of midcaps than Equity Fund and relatively lesser no of stocks since the risk taking ability of the fund is relatively higher.

2. The overall exposure to financials in the portfolio of the two funds is high, what is the view driving this exposure?

The Benchmark to both the funds is the BSE100 which has a high weight-age of Financials. Also prior to the recent RBI action we were bullish on some of the private banks, on account of their ability to manage growth and asset quality very well. However, given the spike in interest rates and bond yields, we are currently re-looking at that assumption.

3. Looking at the portfolio of Union KBC Equity Fund, you have been increasing weightage in FMCG and Pharma as a segment, the timing of this has been accurate. Could you share the trigger behind this move?

Markets today are driven more by sentiments and less by fundamentals, If you see the current fundamentals it is increasingly becoming very difficult to have confidence in the earnings ability of the various sectors which constitute our benchmarks. While there is good value from a longer term perspective, we are more growth oriented in our approach and the only sectors where we have confidence as regards earnings growth are the sectors like Pharma and Consumers. Lack of options among other sectors can also be sighted as one of the reasons for our optimism related to these sectors.

4. How are your funds positioned in the current market conditions? At current market levels, what are your views on the equity markets?

Markets are highly volatile and are likely to remain so. While Global factors are primarily responsible for the volatility, local conditions have not helped. There are many factors that are causing the volatility in the markets, headwinds in Europe, expectation of tapering of QE in US, a sharp slowdown in China and a sudden plethora of activity in Japan. Unrest in the Middle-east is causing Oil prices to stay high. While domestically, the GOI is making efforts to stabilise the economy and revive growth, for that to materialise we need the Central Bank and the GOI on the same side of the table. Whenever markets are driven by sentiments and central bank statements, volatility is bound to be high. The saving grace for us has been a good monsoon so far. We also believe that, as we are in an election year there will be election related spending that can benefit the economy although temporarily.

The challenges on the Current Account and the Rupee could remain as global Crude Oil prices remain at elevated levels and with a slowing global economy we don’t have enough exports to balance-off our high imports. However we feel in the medium term foreign institutional investors (FIIs) will continue to like India as our long term story looks positive and shrinking of global liquidity would be contingent on global growth, either one being positive for India.

Hence we feel markets could remain range bound with the Nifty between 5400 and 6200 and there is a good chance of a sideways consolidation till the end of the general elections. It could be a good market for traders but a bit challenging for long-only fund managers as outperformance could be contingent on the outcome of short term portfolio positioning.

We have a core portfolio that consists of good quality stocks and sectors that are not exposed to such a high volatility in the markets. Some part of the portfolio which consists of high beta companies, which could be volatile, could be used to improve on the overall performance through some amount of churn, at least until we see macro fundamentals improving.

5. What are your expectations from the upcoming earnings season amid continuing economic slowdown and depreciating rupee?

The first half of FY14 could be lack lustre but the second half of the year could be good for companies as the economy could pick up on the back of a good monsoon and election related activity. INR should also stabilise by then and global situation should start looking better. We are optimistic about the situation pre and post elections and feel the India outlook could change significantly during this time.  

6. What strategy would you suggest the investor to adopt at this point of time in the market?

We think sometime between now and the elections the equity markets and even the debt markets would give a very good entry point for investors. However, it is always difficult to get the exact levels right and hence averaging would be a good way to increase exposure to the markets.

7. Could you throw some light on the structure of your research team?

We have four equity Analysts, one Credit Analyst and a total investment team size of 11 including the dealers and the fund managers. For us investments and performance is about team work and while each of the sectors are handled by the respective analysts, we encourage all team members to contribute to the portfolio performance in whichever way they can.

The views expressed in this article are the views of the author and do not necessarily represent the views of the Company or its affiliates.

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