The 3 principles that guide successful investors

There are several long-term drivers for the economy that will continue to provide a favourable backdrop for corporate India, Roshi Jain, VP & Portfolio, Manager, Emerging Markets Equity - India, Franklin Templeton tells ET Wealth.The market seems to have shrugged off the second covid wave. Is it right to expect a quick rebound?The spike in covid infections has undoubtedly impacted the revival and recovery in the economy due to curtailed economic activity as well as the impact on consumer sentiment. However, there are a few factors that may have helped the market see through the surge. First, the availability of vaccines should ensure the spread of infections is contained sooner rather than later and markets are forward looking. Second, corporate India has used the easy liquidity conditions over the past year to strengthen its financial position and is better positioned to deal with short-term disruptions. Third, companies have brought in flexibility in their operating models using the experience of last year and are better equipped to handle this disruption. With comfort on the ability of companies to deal with shorter term disruptions, market focus has now shifted to medium term drivers such as trajectory of government and private capex, government reform momentum etc. Do you see any risk to the lofty earnings expectations built into stock prices?In the nearer term, the earnings trajectory will be largely determined by the pace of reopening of the economy and normalisation of economic activity. So, it's possible that near period earnings estimates may moderate if return to normalcy takes longer than anticipated. However, as mentioned earlier, markets may shift focus to more medium term drivers rather than the near-term cut in earnings estimates. Is the recent turnaround in performance of FT equity funds purely down to shift in market preferences towards cyclical and value plays?Our portfolios are managed with a focus on long-term fundamental strength of the businesses combined with the valuations they are available at. Our investment philosophy focuses on growth, quality, sustainability and reasonable valuations. We believe our philosophy has helped in wealth creation over the long-term notwithstanding short phases of underperformance. Several segments of the domestic economy were going through a period of repair and restructuring as well as adjustment to the structural reforms that have been instituted over the last few years. This hindered their earnings capability in the short-term but set them up well for a long term sustainable growth trajectory. Our portfolios, which have a long-term orientation, were positioned to benefit from these longer term trends given the attractive valuations that they were trading at. We will continue to remain focused on identifying long-term investment opportunities in line with our investment philosophy and we remain confident that a long-term approach as opposed to tactical investment approach is the route to wealth creation.Your personal investing style is seen as aggressive even as FT equity philosophy is known to be conservative. How do you see your role within the process-driven environment at FT?All portfolios I manage adhere to the Franklin Templeton investment philosophy. Within the broad contours of our investment philosophy, process and the fund mandate, there is sufficient latitude and independence for the fund managers to pursue their investment style and I see this as a key strength of our equity franchise. Since being brought in as lead manager in Franklin Bluechip Fund, it has seen a distinct shift in portfolio stance. What is the thought process behind these moves?The underlying investment philosophy of the fund remains unchanged. The execution of that strategy has been sharpened by leveraging further on our research team strengths and focusing on the best alpha ideas from our research analysts. We believe there is opportunity for alpha creation through active investment management in the large-cap space too. We have thus taken a focused investment approach in our best large-cap ideas while ensuring the fund remains diversified. Which sectors or themes are investment worthy now?The objective of our portfolio is to look at sectors and stocks that are positioned well for the future from a medium term perspective, those poised for sustainable growth and available at reasonable valuations. We are largely bottom-up investors and hence look at stocks on their own merit. There are several long term drivers for the economy that will continue to provide a favourable backdrop for corporate India. We endeavor to identify stocks that have robust operating models and good governance so that they can benefit from not just macro tailwinds but also be able to negotiate economic uncertainties and emerge stronger. At the current juncture the funds are overweight financials, pharma, industrials and telecom sectors.How should investors approach the market in current scenario?Discipline, diversification and due diligence are time-tested principles that have guided most successful investors. We continue to suggest that investors invest with a long-term investment horizon and through systematic investment options. The keyword here is to ‘invest’ and not speculate. Diversification is another important factor. Investors should also do adequate due diligence and take expert advice at all times but more so now given the sharp rally we have seen in markets and elevated levels of retail activity in the markets.

from Economic Times https://ift.tt/3fz4uLT