Return beacon

If there’s one person you must get to know a little better, it would have to be the one you trust your money with. Yet more often than not, investors are happy to go along with established fund houses rather than dig  a little deeper into who is managing their money. In the past, this strategy may have worked well, but choosing the right fund manager now is more critical than ever.  

All along, in India, the secret sauce to outperformance has been superior stock selection. For a good part of the nineties, and the early part of the last decade, the market wasn’t as mature and the inherent inefficiency threw up a lot of investment opportunities. However, the growing appetite for Indian equities among foreign investors has changed the situation decisively. Today, the opportunity set for institutional investors, be it domestic players or foreign institutions, has arguably shrunk despite the steady flow of new public offerings. It’s the same set of stocks that everyone wants to latch on to, and that hardly leaves any room for blatant mispricing. 

Equally, the growing size of some of the equity funds means fund managers will have to increasingly depend on smart “allocation” calls, as opposed to bottom-up stock picking, to stay ahead of the pack. The fund management game is clearly shifting from picking the next new winner to seizing the opportunity when they present themselves, chiefly, by
“behaving” right. 

That’s why it’s imperative to understand the style of a fund manager over a long period of time. Precisely why Outlook Business along with Value Research, India’s premier mutual fund tracking agency, kicked off the country’s first-ever annual ranking of individual fund managers last year in March. Now in our second edition, we are also tracking fund managers over a three-year timeframe in addition to five- and ten-year timeframe, to give a better perspective of their short term performance as well. We have profiled eight new managers across all three time frames.

Often, the decision to move with your fund manager when he switches jobs or stay married to the fund is a difficult one to make, but our individual rankings based on performance will make it easier for you.