Roshi Jain has been holding 9% cash in HDFC Flexicap Fund for a year – that’s over 5000 crs in a 65,000cr+ AuM fund. She is in no hurry to deploy this as she asserts that she will only invest in accordance with her investment framework, at appropriate valuations.
This disciplined investing approach has helped the fund post a healthy 18% 1 yr return, outpacing the broad market BSE500TRI which delivered 9.3% in the same period. This outperformance is a continuation of a rich legacy this fund has built up over 30 years, delivering 19% CAGR, comfortably outpacing its benchmark’s 12.7% CAGR. In terms of compounding, that’s 188x growth in 30 years!
Roshi has been taking profits from industrials through the first half of 2024 on valuation concerns – a move that has helped performance as industrials have corrected sizeably over the last quarter.
She is investing incrementally in healthcare and is getting cautious on IT services, where she feels the growth-to-valuations equation is beginning to look a bit stretched now.
Her view on markets is that the market is adjusting to a new normal growth rate, which is a bit lower than the post-covid pace that we saw in 2022 and 2023. Valuations in this light are looking stretched and will need to correct. While we are likely to see some earnings rebound, don’t expect to go back to the post covid phase. Mid teens expectations are reasonable going forward.