Amit doesn’t think Invesco is late in launching its manufacturing fund as he sees manufacturing as a huge turnaround story from a cycle perspective, and the turnaround has just begun.
Amit says we are likely to see many companies reporting explosive growth in the coming years. While growth in our economy and exports will be huge drivers in themselves, the sheer opportunity in import substitution alone is enough to propel our manufacturing story significantly forward in the coming years.
We have to understand that PLI in many cases is serving the role of viability gap funding through a capital subsidy – thus acting as an enabler for companies to take a business risk. The key therefore is to focus on the business opportunity and not the PLI in itself, when looking at investment opportunities.
Amit says that while the index is heavily skewed towards auto and pharma, he will not be constrained by benchmark weights.
He will pick stocks bottom up which are globally competitive (35% of stocks in his model portfolio), have access to good technology (15% of stocks) and are experiencing demand recovery/tailwinds (50%of stocks). Largest sub-segment within the 3rd category is import substitution driven demand tailwinds.
Largest exposure in the fund will likely be industrials and lowest will likely be commodities.