UTI Opportunities Fund finished on top in the 'Equity: Long-term Growth' category of the BT-Value Research Awards. Its manager Anoop Bhaskar, also the Head of Equity at UTI AMC, spoke to BT about his investment philosophy and outlook for the markets, among other things. Excerpts:
On the current state of the economy
The scenario now is different than three years back. In January 2009, companies had started laying off in India. There was a slump in demand, but now we still have robust demand. Nobody wants to invest in a project because of issues with land acquisition, environmental clearance, raw materials, etc. The real pressure is on expansion. It's not that companies want to cut costs and people because there is no demand. My indicator (for the state of the economy) is availability of parking space at PVR Juhu on Saturday nights. No one (in 2009) would watch pay Rs 350 for a ticket and I could easily park my car. Now you park your car on the main road and hope nothing happens.
Outlook for the fund in the immediate future
This fund limits the number of stocks of 35-37 at any point. So we have to take more concentrated calls. We can't do a portfolio approach of buying three companies in a sector. About 24 per cent of our portfolio is financial services. We still think that banks will be strong. We just don't think the market doesn't run ahead because it has these expectations from the RBI. They raised 350 bps in 18 months but they won't cut 350 bps in 18 months. You know markets tend to get too optimistic.
His investment philosophy
What we want to buy is a mix of companies that have good quality in terms of generating free cash flows and have good operating assets that deliver above-average return on capital employed and mix it with companies that are tactical in call because of where the economy is poised. We don't want to have more than 80 per cent portfolio turnover in a fund like this. We don't try to play for every turn and twist in the market. If we take 3-4 broad calls every six months-one year and then get two calls right we'll be happy.
Best and worst moments of his investing career
The worst would be March 2009. We had 20 per cent in cash but we didn't have the nerve to buy. I hope the best is yet to come.
On investor perceptions of equity
People don't want to take equity as an alternative to savings. They want to take tactical calls. Equity is not supposed to be a tactical call, where you move in and move out based on where the markets are. You are supposed to stay invested for 5-10 years. We are not seeing people existing equity. But if they had 50 per cent exposure in their portfolio, now it's 40 per cent. The average holding period of a mutual fund has fallen to 2 years.