Fund Manager Interview
Mr. Taher Badshah
Chief Investment Officer - Equities, Invesco Mutual Fund
Mr. Taher has over 24 years’ of experience in the Indian equity markets. In his role as Chief Investment Officer – Equities, he is responsible for the equity management function at the firm. He joins Invesco - India from Motilal Oswal Asset Management where he was the Head of Equities, responsible for leading the equity investment team. In the past, he has also worked with companies like Kotak Mahindra Investment Advisors, ICICI Prudential Asset Management, Alliance Capital Asset Management, etc. He holds Masters in Management Studies (MMS), with specialization in finance from S.P. Jain Institute of Management and a B.E. degree in Electronics from the University of Mumbai.
Q. What is your opinion on the current market direction and the valuations?
Answer : Indian markets have been displaying considerable strength on the narrative of a likely improved economic cycle and resultantly a stronger corporate earnings trajectory in the coming years compared to the past 3-5 years, helped by a stronger well-capitalized banking system, lower interest rates/inflation, better rural demand and govt policy that has increasingly turned growth-focused. We reckon India is at the start of a new earnings cycle which will likely gain in strength as the effects of the pandemic abate over the next 2-3 years. The Sensex trades at a 30% premium to its long-term average on a TTM basis and reflect the deep damage to nearly 3 quarters of earnings for FY21. While valuations appear optically challenging, we think they are fair in the context of historically low interest rates.
Q. How would you describe your investment strategy for your flagship funds at present times?
Answer : Incrementally, our portfolio positioning does assume acceleration in economic growth which should favor cyclicals such as financials, industrials, commodities etc. At an aggregate level however, we continue to adopt a middle path in portfolio construction with regard sector exposure, market cap bias and the balance between growth and value. In general, our portfolios continue to be positioned for better risk-adjusted return outcomes over a 3-5-year period.
Q. How would compare your fund house's investment strategy with other fund managers? Is there any difference you wish to highlight?
Answer : At Invesco India, our investment philosophy is based on the twin pillars of running ‘true to mandate” and “active” fund management. Our unique ‘stock categorization framework’ serves as our decision-making structure for all our investment ideas. The framework at its core, attaches a clear investment rationale at the outset for each of our stock ideas in the portfolio and the entire life-cycle of ownership to disinvestment of a stock in the portfolio is governed by this framework. We believe our investment strategy of running predominantly active, compact and fully invested portfolios at all times distinguishes us from our competition.
Q. What sectoral changes have you made in your portfolio and why? Which sectors are you overweight on?
Answer : As stated above, measured by our current macro outlook, at the margin we have increased the value tilt in many of our diversified strategies. In doing so we have added weight to financials, industrials and commodity cyclicals. Overall, financials, technology, consumption and industrials form the bulk of our portfolios.
Q. What risks do you foresee in the present markets? Can there be a sharp correction if the pandemic situation worsens?
Answer : The emergence of a second wave and the recent rise in COVID-19 cases in many districts of India does bring uncertainty to the markets in the near-term. While local authorities have started to impose restrictions on some selective services, the manufacturing sector remains nearly unscathed. Besides, an accelerated and extended roll-out of the vaccine program and the low fatality rate mean that central and provincial govts would resist severe lockdowns thereby cushioning the impact on overall economic growth. We therefore think risk to earnings is currently moderate. Alongside, inflation, global and domestic monetary policy are monitorable.
Q. What would be your advice to existing investors and the new investors considering entry into equities at these levels?
Answer : India’s attractiveness as an attractive long-term investment destination continues wherein near-term market weaknesses may offer attractive entry opportunities. We think the overall global and local economic construct today is favorable for India to accelerate upon its promise of a high potential, under-served/under-penetrated market. We are committed to the idea that as the effects of the pandemic abate, India will stand out within the global circuit on growth and market returns. Investors should however also prepare themselves for possibly slower market returns in the near-term as a consequence of very strong market performance of the past 12 months. We recommend investors adopt the mutual fund route for their long-term investment plans to ensure better risk management and performance consistency.
Disclaimer –
The views are expressed by Taher Badshah at Invesco Asset Management (India) Private Limited. The write up is for informational purposes only and should not be construed as an investment advice or recommendation to any party or solicitation to buy, sell or hold any security or to adopt any investment strategy. It should not be construed as investment advice to any party.. It contains statements that are "forward looking statements," which are based on certain assumptions of future events. Forward-looking statements are based on information available on the date hereof. Actual events may differ from those assumed. The views and opinions are rendered as of the date and may change without notice. The statements contained herein may include statements of future expectations and other forward looking statements that are based on the prevailing market conditions / various other factors and involve known and unknown risks and uncertainties that could cause actual results, performance or events to differ materially from those expressed or implied in such statements. The data used in this document is obtained by Invesco Asset Management (India) Private Limited (IAMI) from the sources that it considers reliable. While utmost care has been exercised while preparing this document, IAMI does not warrant the completeness or accuracy of the information and disclaims all liabilities, losses and damages arising out of the use of this information. The readers should exercise due caution and/or seek appropriate professional advice before making any decision or entering into any financial obligation based on information, statement or opinion which is expressed herein..