JM Mutual unveils 5-fold strategy

Nearly five months after Sandip Sabharwal took over as chief investment officer at JM Financial Mutual Fund, the high-profile fund manager has chalked out major plans for the small-sized fund house.

His mission: Restructure the portfolio of equity schemes and make the schemes grow by five-fold from the present Rs 600 crore to Rs 3,000 crore in two years.

"Currently, size of our fund house is around Rs 3,200 crore. Of which, nearly Rs 600 crore is equities. On the equity side, we are looking at a size of around Rs 2,000 crore in the next one year and Rs 3,000 crore by next two years," Sabharwal told Business Standard in an interview.

About portfolio restructuring, Sabharwal said: "Our approach will be sustained growth with lesser volatility. During the restructuring, we made many changes. In some cases, the sector-wise allocation was effected, and in certain cases portfolios were completely changed. We have also changed the number of stocks in the portfolio to 25-30."

He also said that the fund house, which handles four sector-specific funds, might realign some of its sectoral funds.

The Securities and Exchange Board of India's proposed move to allow short- selling of stocks by institutions may benefit mutual funds, Sabharwal said.

"If you got a long-term portfolio, then you could lend your portfolio and make returns out of it. Normally, it could be 10-12 per cent depending on the stock and could touch 20 per cent on a long"�term. Passively-managed funds could also generate good returns using this mechanism," said Sabharwal.

Initially, the market regulator may permit short selling of stocks in the F&O category. A detailed guidelines are expected in a couple of months, according to reports.

Sabhwarwal is bullish on sectors such as capital goods.

"Right now, the sector, which looks attractive, is capital goods with power equipment companies putting up a better show. Telecom would continue to grow. We are not clear on pharma. Technology could suffer in the near- term unless the rupee comes down."

The Nimesh-Kampani controlled JM Financial recently bought its foreign partner Morgan Stanley's 49 stake in investment banking business for Rs 88.5 crore, while sold its equal stake in the broking JV for Rs 1,970 crore.