Prateek Agrawal, Head - Equity, Bharti AXA Investment Managers, holds a Post Graduate Diploma in Management from the Xavier Institute of Management, Bhubaneswar. He has gathered over 14 years of experience in investments beginning with SBI Capital. From there he moved on to ABN AMRO Asset Management Center. Prateek was the youngest ever in the industry to be given charge of a full fledged research team at SBI Capital. Prateek heads the equity desk at Bharti AXA Investment Managers, the same position he last held at ABN AMRO AMC, and is responsible for the entire equity portfolio including research.
Bharti AXA Investment Managers Private Limited is a joint venture between the Bharti Group represented by Bharti Ventures Limited, and AXA Group represented by AXA Investment Managers and AXA APH (through NMIPL). Bharti AXA Investment Managers Private Limited was incorporated on 13th August, 2007 and is headquartered in Mumbai, the commercial hub of India. With a presence in more than 34 locations across the country within one year of the launch, Bharti AXA Investment Managers boasts one of the largest footprints for any AMC in the country during launch. This indicates the retail focus of the AMC. With best practices brought in from world leaders in financial protection, Bharti AXA Investment Managers aim to be an aggressive player in the Indian Asset Management Industry. Bharti AXA Investment Managers employs stringent risk control methodologies. With risk management at the forefront and knowledge sharing amongst nearly 500 professionals worldwide, our fund managers have access to an overwhelming pool of research. Risk Management is also an integral part of product development. With processes in place, our investment teams are empowered to take necessary decisions and are made accountable for every investment process. Fund management constitutes an intricate understanding of global and local economic conditions.
Replying to Anil Mascarenhas of IIFL, Prateek Agarwal says "We are bearish on sectors like FMCG where the competitive intensity is rising and the growth rates are sub economy while the valuations are usually higher than the market average"
Brief us about Bharti AXA MF’s investment approach.
At Bharti AXA Investment Managers, we follow the investment philosophy of Growth at a reasonable price and believe that this works best in the interests of the investors, India being a growth country. We look at global and domestic economy and government policy to identify themes which may offer the maximum upside and then focus on the stocks to identify ones that offer the best combination of value and fits into our scheme’s other investment parameters.
Which are the sectors you are bullish and bearish?
With a strongly growing economy practically all sectors would tend to do well. Even export focused sectors like textiles and InfoTech are performing well because of increased competitiveness on account of relative currency movements. We continue to be positive on sectors like autos and banking where valuations are expected to be supported by strong Q1 numbers. Amongst commodities, we like Paper and Pulp where commodity prices are strong.
We are bearish on sectors like FMCG where the competitive intensity is rising and the growth rates are sub economy while the valuations are usually higher than the market average. The other sectors that we are bearish on are levered real estate plays.
Given the ever changing environment do you think retail investors need to rebalance their portfolio very often?
Our changes in portfolio are dictated by absolute valuations, relative valuations to the peer set and the changes in the environment. While buy and hold is a good strategy, we need to keep doing realty checks to see that the stock prices are grounded in reality. Changes in external environment can change the outlook of a stock considerably as we have seen in the recent past. For example rise in volatility indicators like VIX makes the market shun risk and vice-versa.
Do you advocate rupee-cost averaging? What about the expense ratio?
Expense ratio is the expense that is charged to the scheme corpus. Expenses are charged to all schemes, and should not influence investment decision.
Rupee cost averaging works well under most circumstances vs. investing the entire amount at a given period of time except when the market is in a strong up move.
What impact is the current Euro crisis having on the industry in general and retail investments in particular?
The various difficulties in the financial markets globally are a big source of volatility in the markets. While the economic linkages may be weak and emerging economies can deliver strong growth even if the developed world economies grow below trend rates, the stock markets may mimic the behavior of larger markets because the financial market players are common across markets.
High volatility in the financial markets lowers investor risk appetite and on the margin influences flows into the market negatively.
To what extent can India be isolated or de-linked from the current crisis? Your view on the economy, inflation, dollar, crude and gold?
Economic crisis anywhere in the developed world impacts India through lower demand from its exports and a lower risk appetite which translate into lower investments. On the positive side, the demand for commodities gets tempered and the price outlook of commodities like Oil gets bearish which helps a country like India which is a big importer of oil.
Hence overall, a global event, while it impacts the Indian economy and may create a different set of winners and losers, the impact overall in terms of GDP growth outlook is not very high.
India is a country where the savings rate has been increasing sharply over time and if the trend continues, the country would be able to sustain a significantly higher growth rate based on domestic savings pool itself.
However, the same cannot be said for the markets. The exposure of FIIs to the Indian market is estimated to be around 17 percent and change in direction of FII flows make our market moves synchronized with that of other global markets. The impact can reduce if Indian financial institutions like banks, insurance and mutual funds become large enough and have a steady stream of inflows to counter the FII flows.
In short, we believe that policy can work in a manner, as demonstrated over the past two years, to reduce the global impact and keep the Indian economy growing, the same cannot be said about the financial markets over narrow periods of time. Overtime, the financial markets should be expected to catch up on fundamentals.
We believe that the period ahead would be good for the Indian markets which have spent a considerable period of time in a consolidation zone. The recent economic data has been strong and the state of government fiscal has improved significantly on account of success of 3G auctions. The first quarter results which are around the corner should be strong and help the market sustain and improve the current valuations.