Shridatta delves into performance drivers of two flagship funds of the AMC – Bluechip (which is celebrating its 14thanniversary) and Flexicap (which is celebrating its 21stanniversary).
Bluechip has consistently been ranked in Q1/Q2 over the last 10 yrs while Flexicap has oscillated between Q2 and Q3 over the same period.
Shridatta’s strategy in Bluechip remains true to label –he doesn’t use a lot of the residual 20% to allocate into small and midcaps, and consistently focuses on selection (stock picking) over allocation (top down sectoral calls).
He monitors his selection ratio every year (percentage of stocks in the portfolio outperforming the benchmark) and says Bluechip has consistently been above the 65-66% mark over time – which has contributed to its strong performance.
In Flexicap, he currently has over 80% in large caps, 18%in midcaps and negligible small cap exposure – an allocation strategy that has contributed in part to relative underperformance vs peers who typically arerunning with 30-40% in mid and small caps.
The AMC’s flexicap will usually allocate between 20 to30% to mid and small caps and will always have a strong large cap tilt – whichdifferentiates it from their multicap fund.
He admits that some calls didn’t go well in Flexicap –including remaining invested in some chemicals stocks, private sector banks and a couple of consumer names.
With large caps now coming back in favour, with quality/growth finally beginning to outperform and with banks now beginning to come out of their slumber, Flexicap’s performance has begun turning around and Shridatta is confident about better days ahead for the fund.
Shridatta says the era of the last 3 years of buying what’s cheap while ignoring what’s good is now finally changing and reverting to what we’ve seen for most periods of time in our markets: preference for good businesses run by good managements – a phenomenon that plays well into Canara Robeco’s focus on quality/growth over value.