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PGIM India’s new multicap fund will likely have around 40-45% large cap, 30-35% midcap and 20-25% small cap exposure in its initial portfolio, based on the current model portfolio that Vivek has constructed for this new fund. He does not believe in top down cap size based allocations – he will focus only on bottom up ideas across cap sizes and cap-size allocations will be purely an outcome. The portfolio will likely have 60-70 stocks.
Vivek has identified 5 broad themes that will guide his stock selection: healthcare, financialization, mobility, consumption and new energy.
Green shoots of quality outperforming value and momentum have begun to appear (1 month and 3 month timeframes) which are encouraging for PGIM India as its equity style is decisively anchored around quality/growth. Quality’s underperformance over last 3-4 yrs has been a drag on the fund house’s equity performance - these green shoots are a welcome change, which Vivek believes will sustain going forward.
Vivek says the biggest risk in the market (not considering external risks like geopolitics etc) is the risk of overpaying for growth in a market that’s no longer cheap. He doesn’t mind paying for high visibility growth – the key is to do your independent assessment on visibility of growth over next few years.
