The new SBI Innovative Opportunities Fund will invest in product and process innovators as well as established companies that are adopting innovation, where at least 15% of their economic value can be attributed to these innovations.
Innovation as a theme is very important as it harnesses value migration across sectors from less innovative companies to more innovative companies. This is happening across the world with India being no exception, and this theme allows investors to capture this unique dynamic of value migration.
Prasad sees promising innovators in the cloud space, e-commerce platforms, DTC consumer goods companies, EV focused auto ancillaries, research focused pharma companies and new tech focused industrial companies.
Expect many more new age companies to get listed in the coming years. Prasad believes these companies will give excellent entry points within the first two years after listing – and it’s important to be agile to snap them up when such opportunities arise.
He expects to have an initial portfolio of around 40 stocks with a good mix between innovators and innovation adopters. Over time, he expects the portfolio to gradually lean more towards innovators – as many more get listed and depth increases in this space.
Expect the initial portfolio to have very low presence in banks, software services and commodities, while auto ancillaries, pharma, industrials and new age businesses will likely have sizeable allocations.