ET Wealth together with Morningstar India have selected and ranked India's best equity fund managers, across categories, based on their five-year risk-adjusted returns. Here are the top 5 in the large cap category who have created the most wealth for investors.
These managers have proved their mettle while dealing with stock market volatility and have delivered consistent returns over the years. Read on to know how the best investing brains in the country have negotiated the tides of the market.
1. Neelesh Surana
Age: 50 Years
Education: B.E.(Mechanical), MBA (Finance)
Experience: 24 years
Mirae Asset Global Investments
- 5-year asset weighted return: 14.40%
- Average 5-year AUM: Rs 4,418 crore
- Risk adjusted returns: 0.64
Fund managed: Mirae Asset Large Cap Fund
AUM (Rs cr): 13,492
Annualised Returns (%)
| 3-Year | 11.20 |
| 5-Year | 13.04 |
How he has managed the fund
After a decade marked with consistent outperformance, the multi-cap oriented Mirae Asset India Equity helmed by Neelesh Surana altered its positioning last year. Amid the re-categorisation, the fund house felt that aligning with the largecap mandate would improve scalability and liquidity of a scheme absorbing heavy inflows. Being large-cap biased anyway, this change in mandate didn’t require any alteration in Surana’s approach.
Continuing his unwavering focus on stock selection, he has avoided two extremes—excellent businesses priced exorbitantly and firms exhibiting issues with their business model.
Amid heavy market polarisation, he skillfully targeted businesses witnessing near-term impairment in earnings but whose long-term earnings trajectory was intact. He has put emphasis on limiting large drawdowns during any market downturn, keeping the portfolio well diversified. This approach is reflected in the superior risk-adjusted return delivered by the fund.
Stock market outlook
a) What the market tells me
We are coming out of a period of sub-par earnings growth, as reflected by the low profit to GDP ratio compared to the historical average. We expect corporate profitability to improve over the next two years. Post the recent correction, there are good longterm investment opportunities across sectors.
b) My portfolio is aligned for
Our approach continues to focus on businesses which could grow earnings despite the ongoing challenges. In the current environment, there are many opportunities in businesses where the long-term prospects are intact, although the near-term could be impaired.
c) Promising theme for the next 3-5 years
We are positive on the consumption oriented businesses. Long-term growth drivers related to favourable demographics, rising income levels and urbanisation, etc. are intact.
Top sector bets
| Financial Services | 36.68% |
| Technology | 10.12% |
| Consumer Cyclical | 9% |
Top stock picks
| HDFC Bank Ltd | 8.95% |
| ICICI Bank Ltd | 6.25% |
| Reliance Industries | 5.50% |
Also read: Best equity mutual fund managers 2019: Ranking by ET-Wealth-Morningstar
2. Sohini Andani
Age: 47 years
Education: B.Com, C.A.
Experience: 22 years
SBI Mutual Fund
- 5-year asset weighted return 12.48%
- Average 5-year AUM: Rs 10,969 cr
- Risk adjusted returns: 0.52
Fund managed: SBI Bluechip
AUM (Rs cr): 21,585
Annualised returns (%)
| 3-Year | 6.39 |
| 5-Year | 10.75 |
How she has managed the fund
Being underweight on soaring index heavyweights has hurt SBI Bluechip in the near term, yet Sohini Andani has not veered from her core philosophy. She insists that what you don’t buy during such times helps create alpha in the long run. Andani has shown preference for businesses that are showing superior execution in a rough environment.
She maintains that the market scenario has been changing pace furiously in recent years and reckons the pain in the financial sector has made things worse than what was earlier expected. On her part, she admits lagging behind in estimating the extent of the pain, but maintains conviction in businesses that have a longer runway for growth. Adjusting the portfolio for a relatively better risk-reward proposition should help her maintain a healthy return profile.
Stock market outlook
a) What the market tells me
Currently, the market seems to be worried about the overall growth slowdown, both on the domestic and global fronts. Continuing negative flows are likely to put pressure on the currency and hence exert further pressure on the markets.
b) My portfolio is aligned for
Our portfolio is aligned for revival in growth. While consumption has driven growth in the past few years, we believe it cannot sustain on its own unless supported by a revival in investments and employment growth. If the growth does not revive, the consumption may disappoint more due to high growth expectations built into the valuations.
c) Promising theme for the next 3-5 years
A pick up in the investment cycle would still be a promising theme in the next 3-5 years even though the near-term scenario indicates otherwise.
Top sector bets
| Financial services | 37.47% |
| Industrials | 10.71% |
| Consumer defensive | 9.14% |
Top stock picks
| HDFC Bank Ltd | 8.93% |
| ICICI Bank Ltd | 5.91% |
| Larsen & Toubro | 5.18% |
3. Shreyash Devalkar
Age: 40 years
Education: B.E. (Chemical Engineering), Masters In Management Studies
Experience: 14 years
Axis Mutual Fund
- 5-Year asset weighted return 11.81%
- Average 5-year AUM: Rs 2,276 cr
- Risk adjusted returns 0.46
Fund managed: Axis Bluechip Fund
AUM (Rs cr): 6,501
Annualised Returns (%)
| 3-Year | 12.56 |
| 5-Year | 11.33 |
How he has managed the fund
Like many fund managers, Shreyash Devalkar treats the quality bias as the backbone of his approach. But he also stresses on objectivity in his quality filters. At a time when businesses that exhibit both growth and quality are quoting a hefty premium, he insists this objectivity can bring some differentiation to his fund’s performance. This is reflected in the portfolio consolidation and distinct tilt towards heavyweights in Axis Bluechip.
Not surprisingly, the fund has proven to be an outlier in the large-cap category over the past few years. Even as its peers have struggled to outperform the benchmark, this fund has generated healthy alpha. Superior downside protection has helped put the fund ahead of competition. Devalkar insists that with disruption abundant everywhere, investors need to be wary about rich valuations and narrowing moats, particularly in large-caps.
Stock market outlook
a) What the market tells me
We have seen a clear bias towards quality in this downturn. Fundamentally weak businesses have been at the receiving end of the market’s wrath as investor confidence has been low. This, coupled with weak demand and poor macroeconomic factors, has led to a steep correction. Much of the pain has already been priced in and hence we believe that going forward, things should get better in a phased manner.
b) My portfolio is aligned for
We remain quality centric. We are objective in implementing our Quality and Growth strategy and are watchful on any disruption in any of the businesses we own
c) Promising theme for the next 3-5 years
Consumption remains the theme for us. Consumption includes financiers (retail banks, NBFCs), durables, staples, auto and discretionary. There will be periods where some segments slow down, but we need to tide over it through a cycle. Demographics and aspirations have been in favour of the consumption theme over the longer term.
Top sector bets
| Financial Services | 42.23% |
| Technology | 11.92% |
| Consumer defensive | 9.09% |
Top stock picks
| Kotak Mahindra Bank | 9.46% |
| HDFC Bank | 7.97% |
| Bajaj Finance | 7.80% |
4. Sailesh Raj Bhan
Age: 46 years
Education: MBA(Finance) CFA (ICFAI)
Experience: 23 years
Reliance Mutual Fund
- 5-Year asset weighted return 12.51%
- Average 5-year AUM: Rs 4,998 cr
- Risk adjusted returns 0.46
Fund managed: Reliance Large Cap Fund
AUM (Rs cr): 12,261
Annualised returns (%)
| 3-Year | 10.19 |
| 5-Year | 11.05 |
How he has managed the fund
In the recent phase characterised by a narrow market, Sailesh Bhan has remained adamant about not overpaying for growth. He believes that while chasing momentum may prove rewarding in the near term, it eventually does more harm than good. Bhan insists that the index often doesn’t respect valuations, and so has chosen higher weights for companies that quote cheaper multiples than the index yet boast better earnings profile.
This fluidity in approach has allowed him to play to his strengths. Bhan firmly believes that even a small shift in sentiment would yield out-sized return in select pockets. Reliance Large Cap has repositioned from its earlier avatar (Reliance Top 200). But given its largecap tilt since 2014, the fund manager has continued on the same path.
Stock market outlook
a) What the market tells me
Performers of the next few years can be very different from those of the last few years as growth and valuations shifts happen. The narrow markets are creating opportunities to create alpha over the next 2-3 years.
b) My portfolio is aligned for
Not overpaying for growth and aligning towards businesses which can significantly outperform in the next three years. The current volatility has created opportunities and valuations are attractive from a 3-year perspective despite slow near-term growth.
c) Promising theme for the next 3-5 years
Domestic cyclicals, corporate lenders, pharma and auto sectors are well positioned from a 3-year perspective.
Top sector bets
| Financial Services | 31.48% |
| Industrials | 17.27% |
| Consumer Cyclical | 13.92% |
Top stock picks
| State Bank of India | 8.40% |
| ICICI Bank Ltd | 8.31% |
| Larsen & Toubro Ltd | 6.34% |
5. Harish Krishnan
Age: 39 years
Education: CFA, PGDBM (IIM Kozhikode), B. Tech (Electronics & Communications)
Experience: 14 years
Kotak Mutual Fund
- 5-year asset weighted return 10.85%
- Average 5-year AUM: Rs 1,197 cr
- Risk adjusted returns: 0.37
Fund managed: Kotak Bluechip Fund
AUM (Rs cr): 1,303
Annualised Returns (%)
| 3-Year | 6.46 |
| 5-Year | 9.44 |
How he has managed the fund
Harish Krishnan’s Kotak Bluechip has held on to well-run businesses. Steering clear of financial leverage, he buys debt-laden businesses only if supported by strong cash flows. The thrust is on identifying pockets with a growing profit pool and focusing on businesses that can best capture the opportunity. Striving to avoid landmines, he has ventured a few notches lower on the quality curve owing to the rich valuations in the creamy layer. He exited early from select consumer stocks into industrials. In hindsight, Krishnan admits he should have been slower in tweaking the quality profile.
Stock market outlook
a) What the market tells me
India is undergoing a prolonged phase of balance sheet adjustment. With banks having to recapitalise, stressed corporate groups have had difficulty either selling few of their illiquid assets or refinance. There is no quick fix and hence don’t expect a dramatic recovery. But we are now closer to the end of the deleveraging cycle.
b) My portfolio is aligned for
We are positioned in sectoral leaders that have invested in their businesses, that have low financial leverage and who can capitalise on the opportunities in the upcoming business cycle.
c) Promising theme for the next 3-5 years
While the infrastructure theme typically conjures up images of debt-heavy businesses with significant project delays, cost over-runs etc, the upcoming infrastructure cycle will be very different. There are interesting sub-themes within this broader theme.
Top sector bets
| Financial Services | 38.80% |
| Technology | 12.86% |
| Basic Materials | 9.91% |
Top stock picks
| HDFC Bank | 9.52% |
| Reliance Industries | 8.06% |
| ICICI Bank | 7.90% |
(Source: Mornigstar India)
