Bandhan Financial Services Fund is off to a promising start with top quartile ranking in its first 9 months of existence. Sumit says his call on diversifying the portfolio across lending and fee based businesses has paid off, in particular his bets on capital market players including exchanges, depositories, asset managers and broking houses. His allocation to banks stands at 47% vs 77% for the benchmark.
This broad-based active strategy he says is the key rationale for investors to consider a dedicated financial services fund like his, despite financials being the largest weight in market indices, as most diversified funds tend to be very bank heavy in their financial exposure, thus missing out on numerous alpha opportunities in the overall BFSI space.
Within banks, he prefers the large private sector banks now, as he feels they are very attractively valued and have strong growth runways ahead. He believes the long awaited mean reversion play for private sector banks will play out sooner rather than later.
He also has a sizeable 30% of portfolio allocated to NBFCs –his preference here is segment-specific lenders (commercial vehicles, micro-finance, gold, renewables etc) where he can take a view on both the lender as well as the underlying business being lent to.