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ETMarkets Fund Manager Talk: Why this money manager sold stake in life insurance companies to add banks & NBFCs

“We have exited a life insurance company as we see better opportunities in banks and NBFCs. We have also recently added exposure to bearing companies as we see long-term growth opportunities for this sector,” says Seshadri Sen, Head of Research, Alchemy Capital Management.

In an interview with ETMarkets, Sen has over 25 years of experience, said: “We have focused on balancing our portfolio with defensive sectors like consumer staples and aggressive positions in mid-caps to generate the alpha,” Edited excerpts:

Markets made history in November. What is your take and how do you plan to grow?
Our endeavour would also be to grow in line with the market

What has been your portfolio strategy amid the volatility seen in the past 1 year?
We have focused on balancing our portfolio with defensive sectors like consumer staples and aggressive positions in mid-caps to generate the alpha.

We believe this period of volatility is transient and remains constructive on the markets from a 2-3 years perspective.

Which sectors are you currently bullish on?
We are bullish on autos, select financials, and industrials. We think we are at the cusp of a multi-year manufacturing and consumption boom and have positioned our portfolios accordingly.

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Any new stocks which you added or sold off amid the rally we have seen from the June lows?
We have exited a life insurance company as we see better opportunities in banks and NBFCs. We have also recently added exposure to bearing companies as we see long-term growth opportunities for this sector.

As SIP cross Rs 13000 cr per month – what does it tell you about the retail investor behaviour? Can we say that they have come off age?
The momentum in SIP does, indeed, point to the growing maturity of retail investors. The higher share of SIPs in inflows points to investors being more disciplined in their equity investments and helps them ride out the volatility.

The greater resilience of SIPs to market volatility also points to investors approaching the market with calmer heads. This is a huge positive for both retail wealth creation and the overall market outlook for India.

What is your take on the new-age tech companies? Are your comfortable adding them to the portfolio?
The new-age tech companies are solving problems for consumers that traditional companies cannot. There are profitability challenges in the early years, but the operating leverage is huge and the winners have a long runway of growth and, ultimately, profitability.

We have taken selective exposure to some of these companies that have already established large customer franchises.

We are mindful of the key risks – a) there should be a clear path to profitability b) balance sheets should be strong as future funding may not be easy c) business hyper-growth should remain on track and (d) founders understand prudent capital allocation

How does your fund manage risk?
We manage risk at two levels. At the macro level, we focus on diversification and sectoral allocation to ensure that we do not get excessively exposed to extreme macro volatility.

At the micro level, we dig deep into each stock – analysing balance sheets, management, and industry conditions to proportion the risk in each stock.

All portfolio stocks are classified on quality metrics and the fund managers pay attention to these metrics when building their portfolios. We have a well-defined quantitative framework to deal with uncertainties.

If someone plans to put in say Rs 10 lakh now do they follow a staggered approach or a lump sum approach as markets are on verge of hitting highs?
Lumpsum amounts can be staggered to protect from near-term market volatility. We, however, recommend staggering for not more than 1-2 quarters so as not to suffer cash drag if the market rallies hard.

What is the kind of cash levels you are sitting on – to be deployed on dips?
We are sitting on minimal cash and are staggering new inflows generally within a month in most cases.

A little about yourself and how you started your equity journey?
I started my journey in 1992 with

Asset Management, which was a JV with Soros Funds. I spent the first few years largely on the buy side, with a longish spell at AMC with fund management experience across equities, bonds, and money markets.

I moved to the sell side as a financial sector analyst at the turn of the century and spent 18 years across firms like SocGen, Macquarie, and JP Morgan. On leaving JPM in 2018, I returned to asset management with Alchemy.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)



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