Fund Manager Interview
Mr. Shridatta Bhandwaldar
Head Equities - Canara Robeco MF
Mr. Shridatta Bhandwaldar is a Fund Manager at Canara Robeco Asset Management Company, Robeco’s joint venture in India. He comes with over 13 years of experience and is actively involved in managing the Canara Rebeco Equity Diversified fund, Canara Rebeco Bluechip Equity Fund, Canara Robeco Infrastructure , and Canara Rebeco Equity Hybrid Fund.
Prior to joining Canara Robeco, Shridatta was Head of Research and Senior Equity Analyst with SBI Pension Fund Pvt. Ltd. He has also worked with other reputable names which include Heritage India Advisory Pvt. Ltd., Motilal Oswal Securities Ltd. and MF Global-Sify Securities Ltd. Shridatta has successfully completed his MMS in Finance from University of Mumbai and B.E. (Mech) from Aurangabad University.
Q. The markets have again reached all-time highs. What is driving this market rise, in spite of the economy not doing well? What internal projections do you have for economic growth going forward?
Answer: Market is a forward discounting mechanism. It’s not discounting what is happening today but is trying to access factors that will define FY22/23 corporate profits. There are few factors which have clearly been positive surprises over last few weeks and months viz. 1) Corporate profits and demand recovery has been far better than estimated, 2) Bank slippages have been much lower than what market was estimating, 3) COVID daily cases have been falling for 3 weeks now and potential Vaccine news flow, 4) US election uncertainty is out and 5) Indian Govt is focusing on reforms and PLI schemes to drive manufacturing when it is short on capability to expand balance sheet. Also, 8 months have passed in this event, so we are having rollover to next year’s earnings gradually. Valuation although seems fair at 20xFY22, lower interest globally and capital flows towards EM can keep them elevated unless earnings disappoint meaningfully.
Q. What is the investment strategy you are following in the present markets? Please share with us the sectors and market segments where you are investing and why?
Answer: We have made few changes into the event like addition of Auto, IT, Chemicals and Pharma during April – August’20 given lack of visibility in largest domestic sector financials, Investments and other discretionary. However, given that we were less worried about the NPAs, we have been adding financials, Cement and select consumer discretionary over last 3 months and have gone EW or OW across our portfolios.
Q. Can you help us decode the impact COVID has had on our companies? Can you highlight the big winners and losers and the major opportunities and threats visible now?
Answer: This event has clearly benefitted organised players in each sector given they are gaining market share and ability to save, or control costs is huge in this environment.
Q. There has been a lot of volatility in the small and the mid-cap stocks. What would be your advice to the investors to stay put in such funds?
Answer: I think investors should stay put in mid and small caps given the economy is still at cyclical low points and these segments of markets are still undervalued if you look at it from whole economic cycle perspective.
Q. SEBI has recently revised the mandate for multi-cap funds and now has also introduced 'Flexi Cap' funds. Can you please share the impact of these decisions on portfolio management and on your flagship funds belonging to this category?
Answer: We intend to retain the ability to move across market cap spectrum in this portfolio by moving the fund in newly created Flexi Cap category.
Q. What advice would you give to investors sitting on an all-equity portfolio currently? What would you advise new investors looking to enter the markets? How many returns can they expect over a period of say 5+ years?
Answer: We have been in cyclically lows of corporate profits in India over last 2-3 years. We would advise investors to stay put through the cycle to get compounding effect of underlying corporate profit growth, when it plays out over next 2-3 years. Expect a return of 5-7% over and above inflation in India through cycle on CAGR basis.