'Investors can expect 15-20% returns'

MANAGER SPEAK/Ayaz Motiwala, fund manager (equities) of Birla Sun Life AMC

The fund has a considerably high allocation to mid-caps. Will it not increase risk for investors in a shaky market like the one currently existing?

We have always bought companies on their business merit at reasonable valuations. While mid-cap stocks have had a rough ride in the near term, it should be viewed in the context of a 120-130 per cent upmove in the last six to nine months. We believe that valuations will come back over time if the overall story about a company is attractive.

The fund has completely got out of technology stocks. What is your take on the sector going forward?

Our investments are based on assessments of individual companies. We do own some small positions in the IT services business. The future course of action will be based on business quality and the price to be paid to purchase those cash flows.

Markets are highly volatile now. What would be your strategy to protect the fund from extreme volatility in prices?

We have a combination of quality large- and mid-cap stocks. These are good businesses which we have bought at reasonable valuations. We hope our business judgment pans out as per expectation which could result in sustained earnings and share price growth.

What is your prognosis for the stock markets going ahead?

We must remind ourselves of returns in the last fiscal and sustainable returns going forward. We need to focus on the quality and quantum of earnings growth. Investors must have broad return expectations in the 15-20 per cent range.