In bear markets, we move into defensives like Pharma and FMCG. Moreover, a lot more emphasis is given on stocks rather than top-down approach. This helps the fund contain erosion of its value. Does the fund's focus on diversification hamper its growth in buoyant market conditions?
To a limited extent, yes. However, we try to reflect our views on the sector by buying into more number of stocks. But as you guessed, laggards in a sector will not give the same return as leaders.
What are the prospects for FMCG and healthcare sectors?
We have turned positive on healthcare. We believe that relative to cyclicals, the sector is attractive at the moment. We are not yet positive on the overall FMCG sector.
What kind of a strategy would you recommend in the present stock market conditions?
Systematic investment - treat the investment in equity funds as part of savings; wait it out and exit when you have a better use of money elsewhere and your returns look obscenely high.
