The fund invests with a contrarian philosophy. This works in two ways. The first is to invest in sectors that are under-owned "� fundamentals of these sectors are turning positive but the triggers are away.
A recent example is automobiles. We got out of steel and went into autos when people in were positive on steel but negative on auto.
This provided good returns. The second level of contrarian play is on large-caps and mid-caps. For example, we were overweight on mid-caps through 2004 and early 2005. However, when we thought that the frenzy for mid-caps was making valuations high we shifted into large-cap stocks.
What is your overall strategy?
Any fund manager has to take a call on the stocks and sectors that he has to invest in. An over-diversified portfolio will seldom outperform the markets.
We try to have a portfolio where five sectors and 20 stocks constitute more than 80-85 per cent of the portfolio. This is an actively managed fund where we shift sector and stock preferences fast.
Which are the sectors that you are bullish on currently and which sectors are you bearish on?
I am positive on capital goods, engineering, cement, automobiles, media, construction and textiles, and underweight on IT and pharma.
What is the rate of return that equity investors can look forward to in 2006?
Investors with a three-year perspective could make 12-20 per cent returns.
