Fund tracker: The top three

The fund managers featured here manage schemes which have outperformed both their benchmarks as well as their peers by a large margin. All of them have come out on top in a Business Standard analysis of mutual funds which took into account returns as well as the quality of gains generated. In other words, these are the investment professionals to watch out for in the years to come:

Digging deep for value

 

R Janakiraman has been managing the Franklin India Smaller Companies Fund since February 2008. He was joined in March 2014 by Roshi Jain. The duo are based out of Chennai and the fund they manage together has outperformed the category average by a double-digit margin so far in the year, with returns of over 60 per cent compared to just over 50 per cent for its peers.

Their investing style is to focus on companies with strong growth. An analysis of the top five holdings shows preference for free cash flows. An analysis by Value Research suggests that investment focus is on companies with high return on investment and manageable leverage. They also show a preference for companies that can control their costs and willing to pay minority shareholders their due.

They find their target companies by digging deeper into the universe of lower market capitalisation companies. The average market capitalization of the fund portfolio is around Rs 4,640.4 crore, which is far below the benchmark average of Rs 18,916.2 crore; and Rs 10,867.9 crore for the category. Also, midcap and smallcap companies make up 89.11 per cent of the fund's portfolio, compared to 79.19 per cent for the category. However, its risk grade remains 'below average' according to Value Research.

Both fund managers are CFA (Chartered Financial Analyst) charterholders and are IIM (Indian Institute of Management) alumni.

Focusing on long-term growth

 

An engineering graduate with an MBA in Finance, Ajay Garg has been managing Birla Sun Life MNC Fund since June, 2009. Prior to joining Birla Sun Life AMC in 2003, Garg was with Birla Sun Life Securities. Along with the AMC fund, he manages nine other schemes as well, which include Index, Tax, Capital Protection and an Arbritrage fund.

The MNC fund's objective is to invest exclusively in securities of multinational companies in order to achieve long term capital growth with moderate levels of risk. Over the last five years, the scheme has outperformed the benchmark with annualised return of 23.04 per cent against the benchmark's gain of a mere 14.71 per cent. The fund has outperformed in the short-term as well.

In 2012, Citywire 1000 - a comprehensive guide to the world's top fund managers - had ranked Garg 42nd among the world's top 1000 fund managers. And from India he was the only one to make it to the top 50. According to the Citywire data, the Birla Sun Life MNC fund has been the best performing equity fund investing in India for 3 & 5 year periods ending December, 2012.

Minimum risk, maximum returns

Starting his career as an equity analyst at age 28, Mrinal Singh is now a senior fund manager at India's second largest fund house ICICI Prudential AMC. Currently, he looks after five schemes with a consolidated asset size of more than a billion dollar (Rs 6,000 crore). His entry in ICICI Pru was a few months before the Lehman Brothers went bankrupt. He, coincidentally, was given the IT sector to track in 2008, which was going through a troubled time because of issues faced by clients in the US financial services space. A year later he began imanaging ICICI Prudential Technology Fund and his journey began as a fund manager.

The real change came when one-and-a-half years later, ICICI Prudential's Discovery fund was handed over to Singh in February, 2011. In May that year, he was given additional responsibility of managing the Midcap Fund.

All the three big funds Singh manages have been out-performers - be it against their respective benchmarks or among their peers. The Technology Fund, in particular, needs attention as it is the only fund which has at least a five-year track record under Singh. The scheme has given annualised returns of 25.95 per cent, which is much higher than the benchmark and category gains of 18.95 per cent and 18.13 per cent respectively.

Singh believes the stock market is like a boxing game. There will be hard knocks which can knock one to the floor. "But you do not lose the game till you refuse to get up. The market is the same. Mistakes are bound to happen. Sometimes, you are too early though you may not be wrong. But, you need to lift yourself up - that's the key," Singh, now 35, explains his investment philosophy.