All work and no play

KNOW YOUR FUND MANAGER

All work and no play makes Prudential ICICI Mutual's Anil Sarin a smart fund manager.

Anil Sarin says he prefers going contradictory to established ideas. The 40-year old co-head of equities at the country's largest fund house Prudential ICICI Asset Management says he likes to go by his own gut feel rather than pay heed to established industry wisdom.

"I pick stocks which are out of favour," says Sarin for whom the most gratifying thing is to identify stocks before the market discovers them.

Sarin's approach to stock selection is clearly bottom-up, with emphasis on companies that have good growth prospects. 
 

SARIN'S SCORECARD ... while at Birla Mutual
Scheme Performance (%) as on Oct 31, 2003
	Last
	3 months	1 year	2 years
Birla India Opportunity Fund	28.36	64.55	165.74
S&P CNX 500	28.89	75.24	92.22
Birla Equity Plan	35.85	131.90	148.17
Bse Sensex	28.61	66.30	60.89
At Prudential ICICI...
Scheme Performance (%) as on July 7, 2006
Pru ICICI Dynamic Fund	-13.82	56.49	180.02
Pru ICICI Power Fund	-14.03	52.43	141.44
S&P CNX Nifty	-10.97	41.13	96.31
Pru ICICI Emerging Star Fund	-19.87	48.66	"�
Pru ICICI Fusion Fund	-13.60	"�	"�
Nifty Junior	-11.56	14.17	76.68

"Sometimes a business model may not look promising but it might click in the future. I select companies first and then zero in on what to buy," he says. Sarin likes companies with innovative business models.

"I invest in companies that have a capability to grow, to dominate and make substantial profits. I lean towards businesses with a high growth and return on investment," he adds.

The most striking fact about Sarin is his unusual career graph. After completing his graduation in commerce, Sarin joined the Indian army where he served for six years as an infantry officer.

"Coming from a family with an army background, it was obvious for me to get into armed forces. During my years in the army I realised that I was more inclined towards analytical pursuits and decided to opt for a more stimulating career," he says.

After completing his MBA from IMT Ghaziabad in 1994, he joined SBI Mutual Fund and worked in equity research. He says, "SBI was considered the biggest fund house in those days and their formal training process was the ideal way to learn in the initial years."

In early 1996, Sarin joined Birla-Capital International (now known as Birla Sunlife Mutual Fund) as a FMCG analyst and later started covering IT.

Post the technology meltdown in 2000, he started managing the Birla IT Fund, which won the CNBC award for the Best Technology Fund in 2001 and 2002. Since 2002, he started managing the Birla MNC Fund and Birla Equity Fund, which bagged the CNBC award for the Best ELSS Tax Saving Fund in 2003.

After a brief stint in Kotak PMS, Sarin started his innings at Prudential ICICI Asset Management as co-head equities in April 2004.

"ICICI is a great place to work as we have a large, experienced team. Moreover, a good brand name means good reception and co-operation from company managements," he confesses.

Today, he manages assets of about Rs 3,594 crore spread across four funds, viz. Pru ICICI Dynamic Fund, Pru ICICI Emerging Star Fund, Pru ICICI Power Fund and Pru ICICI Fusion Fund.

Pru ICICI Dynamic Fund and Pru ICICI Power Fund have posted returns of 56.49 per cent and 52.43 per cent against the benchmark (CNX Nifty) gains of 41.13 per cent in the past year. Pru ICICI Emerging Star Fund has yielded returns of 48.66 per cent against benchmark gains (Nifty Junior) of 14.17 per cent in the past year.

Over the years some of Sarin's best picks have been Subex Systems, HCL Infosystems, Glenmark Pharmaceuticals and Alok Industries. "In mid-2003, we bought Alok Industries, a highly indebted company, but it fetched good returns due to a sound business model."

In 2004, Sarin picked up Subex as the company had a dominant share in the Indian fraud management software segment.

Currently, Subex is the largest vendor of this software worldwide and the stock has been a multi-bagger for Sarin. Ditto for HCL Infosystems which he bought in early 2003 because it was gathering pace as the sole distributor for Nokia mobiles and the stock valuations looked attractive.

Sarin is positive on companies with strong brands, integrated manufacturers, print media, banks and consumer goods companies.

Says he, "Going forward, companies with a portfolio of brands will do well thanks to the expanding retail space and mall culture, recognisable branded merchandise will have an edge over commoditised merchandise. It's the brand builders and not manufacturers whether it be apparel, appliances and footwear that will reap the benefits of increasing consumerism."

He is confident that print media companies will benefit from the ad-rate inflation as real estate, auto and IT companies compete for advertisement space. Sarin opines that the markets are looking at sugar companies in a short-sighted fashion.

"The argument of excess sugar supply seems to be myopic. With shortage of crude oil, demand for ethanol is likely to rise and those investors who can hold through this period of uncertainty can expect substantial gains," he says.

Commenting on the recent market correction, Sarin says that investors need to take some more time before taking long-term bets. "The correction is like a relief rally for the markets. We expect the hiccups to continue for a couple of months till the interest rate scenario in the US, EU and Japan stabilises. Investors need not hurry to take long positions and should not leverage and invest as this may hurt in volatile markets."

Sarin however advises investors to invest in equities but with a long-term investment horizon. "Equities have great potential to multiply investor wealth. They allow you to create your own pension. One should increase equity allocation but not with regard to what will happen in the next two months but few years down the line."

Sarin is passionate about investments and reads a lot of books on the subject. When asked about his other interests he says he loves his work and does not feel the need to unwind. He says, "There is no time to invest everywhere and one needs to manage time.

I enjoy every bit of being a specialist rather than a generalist." However, Sarin likes to spend some quality time with his family and is fond of Hindi movies and music.