 "Meet the young fund manager: Mrinal Singh")
Mrinal Singh, 35, who joined ICICI Prudential Mutual Fund - India's second largest fund house, in 2008 as an equity analyst has graduated to a senior fund manager now. Currently, he looks after five schemes with a consolidated asset size of more than a billion dollar (Rs 6,000 crore).
For him, stock market is like a boxing game. If one gets a solid punch, the person falls on the ground. "But it does not mean one has lost the competition till you refuse to get up. Market does the same to you. Mistakes are bound to happen. All of a sudden there is realisation that market is ahead of you and you have hit the ground. Sometimes, you are too early but you are not wrong. But, you need to lift yourself up - that's the key," Singh explains the contours of his thought process when it comes to investments in equities.
He takes pleasure in relating investment making processes with sports as he feels games present easier analogies to explain instances. "Fund management is a game of passion. One can be at average but can't excel if there is no high level of integrity and passion," says Singh, who hails from Jaipur.
His entry in ICICI Pru was a few months before the Lehman Brothers went bankrupt. He, co-incidently, was given IT sector to track then. "There was mayhem in the market and technology was taking the brunt as it was more US-oriented, the source of most of the problems. It was then that technology fund was given to me to manage in August, 2009 and my journey began as a fund manager," Singh reminisces.
After that there was no looking back for him. Few months later, equity portion of a few hybrid funds too came his way. Meanwhile, all along during that phase he had sectoral responsibilities - technology, pharma, hotels and FMCG, among others.
The real change came when one-and-a-half years later ICICI Prudential's Discovery fund was handed over to Singh in February, 2011. Since, it was a bigger in size with an AUM of Rs 1,600 crore, sectoral responsibilities were given away. But this was not the end of Singh's progression as one more fund was awaiting him. In May that year, he got an additional responsibility to manage the Midcap fund.
"My age has nothing to do with responsibilities. The progression of responsibilities has happened as either I have been able to absorb more or delivered according to higher sense of responsibility. It does not happen otherwise," says a confident Singh, a graduate in mechanical engineering from Bangalore University, who also has an experience of working three years in manufacturing. Post that he did his MBA in finance from Mumbai.
All the three big funds Singh manages have been out-performers - be it against their respective benchmarks or among their peers. For instance, in terms of year-to-date (YTD), the Midcap fund has generated returns of nearly 56% against 41% return of the benchmark while category average returns stood at 46%.
Similarly, from a year's perspective the scheme has returned close to 97% while benchmark's and category average returns stand at 55% and 71%, respectively. Same stands true for his Discovery as well as Technology funds.
Technology fund, in particular, needs attention as it is the only fund which has at least a five year track record under Singh. And he has not disappointed investors here too. The scheme's five year annualised returns are at a whopping 30.43% whereas the benchmark and category offered gains of only 24.25% and 22.75%, respectively.
"Risk-adjusted return is something I bother a lot about. I do not do approach investments from the perspective of underweight (UW) or over-weight (OW). If I am not convinced about a stock's business, it should be zero in my portfolio rather than going underweight on it," he elaborates.
"By very nature, equities are more volatile and mid caps more so than the large caps. So, what's the degree of risk that we are exposing that money to? There can be greed for great returns. But, however convincing that could be, I would resist that temptation. It's better to take lesser risks but ensure returns are better," says Singh.
Despite having a steep escalation as a part of his quick graduation process in ICICI Prudential AMC, the period which has coincided with better performance, Singh is modest and believes not to lose the touch with ground. Out performance of his funds does not make him complacent.
"I have not achieved much. There is a long way to go. The 3-5 years track record of performance is good but not extra-ordinary. It has to be ten years and beyond," he adds with a reflection that equity investments is a long term process and there can't be short cuts for wealth generation.
According to him, it's not only his hunch of investments, it's also what people expect of him. That's why it is important that at times one gets out of his shoes and see whether there is any injustice with responsibilities and public money.
His peers say that Singh has a peculiar style of investing as several stocks in his portfolio are out of the respective benchmarks. With many fund managers such a high exposure to stocks out of the benchmark indices could be seen as risky.
Singh defends his style of investment. "At times, 60% of my portfolio is outside the benchmark. It, in itself, is a risk. I am okay with this as I evaluate every business. One has to get the management quality right, get the right assessment of valuation and commit lesser mistakes," he argues.
Being young he is quite ambitious and expects every investment to make return. "I could go wrong; so it's better to build a portfolio with a complete bottom-up approach," he says.
He does not shy away from admitting the fact that at times he lost serious money too. He remembers the basket approach taken three years back in infrastructure when it appeared that sector will inevitably go up. "I am not afraid of losing. But I hate to lose. If I am afraid of losing I would not stand up and fight again," he says.
However, what irritates him is the kind of rumours and noises that keep floating in the market under the disguise of what he calls "khabar". Though one has to face this as a market participant, Singh is of the view that one needs to avoid the noise.
"There is all kinds of noise. People keep talking about what is called "khabar". One needs to develop the ability to disconnect with the noise. I try to avoid such people who want to talk about "khabar".
I take a long-term fundamental call. It might not work for a year or two, but that's okay. I feel that keep investments simple and classic. And this approach of investing has worked pretty find with me and I am happy about it," he argues.
For him, understanding businesses is far more interesting rather than just meeting the management. Meeting management could only be a part of the evaluation process. "I am more interested to see facilities and evaluate by talking to vendors and customers. I can't sit only in office and evaluate some numbers," he emphasises.
Like any other fund manager, Singh too, had to deal with his egos when it comes to investments. "Ego comes when you think that something you buy is going to work, although it is not working. Biases can take you to trouble. It can be very problematic and I learnt it early in my career. One should not go overboard," he cautions.
When asked what gives him the greatest happiness, Singh could not hide the moistening of his eyes. After a brief pause, he says, "The biggest solace is when somebody comes and pats on my shoulders and say I did good to his money -- that's amazing."