ET Wealth-Morningstar Ranking - Top 10 Mutual Fund Managers 2016 PDF

8/29/2016 ET Wealth-Morningstar ranking: Top 10 mutual fund managers 2016 - The Economic Times
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ET Wealth-Morningstar ranking: Top 10

mutual fund managers 2016
By Sanket Dhanorkar, ET Bureau | Aug 29, 2016, 10.48 AM IST
Over the last few years, market sentiment has

veered from infectious exuberance to biting
despondency to renewed optimism. From
queuing for cyclicals and rate-sensitive stocks to
obsessing about 'quality' stocks, different themes
have swayed investors during this period. In such
a confounding scenario, a handful of equity fund
These fund managers drowned out the managers have burnished their reputation as
0 market noise to b uild portfolios with
astute stock pickers. Following on last year's
Comments high conviction b ets and stayed the
study, ET Wealth in association with mutual fund
course to deliver high returns for
investors.
research firm Morningstar, has brought out the
best equity fund manager rankings for 2016.
Related These fund managers drowned out the market
Mutual fund managers who invest
noise to build portfolios with high conviction bets
their own money in the schemes and stayed the course to deliver high returns for
they manage
investors. Their success, in no small measure, is
What are the qualities of a good also owed to the robust processes established at
fund manager?
respective fund houses, in addition to the critical
Should you bother about your contribution of in-house research teams. Many on
mutual fund manager's salary
this list have managed funds from the mid- and
Top mutual fund manager exits in
small-cap basket and have been helped by the
last one year
sharp uptick in the segment. Others may have
missed out owing to a lower presence in this space, despite being highly
proficient in running their mandates. As the market situation evolves, some of the
names in this year's list could easily make way for others. But, whatever the market
position, investors are likely to have a good experience with these capable fund
managers. Read on to know how these investing wizards ply their craft and
ensured that investors who trusted them with their money had a great experience.
HOW WE RANKED THEM
Universe of funds
Our study is restricted to open-ended, actively managed, diversified equity funds.
Index funds, thematic and sectoral schemes, and funds with global exposure have
not been taken into account. Schemes with a corpus less than Rs 100 crore have
not been considered.
Time period
The study is based on the performance of funds managed in the five-year period
between 1 July 2011 and 30 June 2016.
Experience
http://economictimes.indiatimes.com/wealth/invest/et-wealth-morningstar-ranking-top-10-mutual-fund-managers-2016/articleshow/53884620.cms?prtpage=1 1/28
Only fund managers with a continuous five-year fund management experience

during the period under study were considered. For a fund to qualify, the fund
manager needed a minimum two-year experience as lead manager of the fund. To
identify the lead fund manager of each scheme, only the primary fund manager
mentioned in the scheme factsheet was considered. Where identifying the primary
manager was difficult, it was confirmed with the concerned fund house.
AUM of manager
The study was restricted to fund managers handeling assets under mangement of
at least Rs 500 crore across all qualifying schemes.
Risk and returns

The aggregate returns generated by each fund manager were calculated over the
five year period for all funds satisfying the above-mentioned criteria, and were
adjusted for risk. It is necessary to evaluate fund manager performance on a
riskadjusted basis to account for the degree of risk taken by the manager to
generate the return. To get the risk-adjusted score, the asset-weighted monthly
returns of all the qualifying funds were calculated. Weighing scheme performance
by its corpus size gives due importance to each fund's size. Then, the annualised
geometric mean for the five-year period was calculated to arrive at the annualised
five-year return. Further, the annualised standard deviation of the monthly asset-
weighted returns was calculated. The final risk-adjusted return was calculated by
deducting the risk-free return (of 364 day treasury bill) from the annualised
geometric returns generated by each fund manager, and dividing these by their
respective standard deviation.
Disclaimer
Morningstar name is the registered mark of Morningstar Inc. The ET Wealth-
Morningstar ranking of Best Fund Managers is based on the methodology defined
by ET Wealth. Morningstar India's contribution is restricted to providing the data.
Morningstar India and its affiliates shall not be responsible in any manner for the
ranking, nor be liable for any damages or other losses that may result as a
consequence of relying on the ranking for investment decisions. The ET Wealth-
Morningstar ranking should not be construed as any kind of advice or opinion
regarding the appropriateness of any investment, or a solicitation for investing in
any mutual fund or any other investment product.
Note: Rankings are on the basis of risk-adjusted returns, hence, some managers,
with higher assetweighted returns compared to peers, rank lower. ^ Average
portfolio exposure is across all funds managed by fund manager as on 31 July
2016.
NA: manager has'nt completed the relevant time period with the fund or the fund
has'nt completed the period. Stock bets based on portfolio as on 31 July 2016 .
Thematic funds not considered for top stock bets. Weighted average used for
calculating the stock exposure.
Rank 1: Vinit Sambre - DSP BLACKROCK MUTUAL FUND
Quick Bite
What's worked for me: Basic

strategies that we stuck to while
selecting companies: Focus on
corporate governance,
management's passion towards

their business, companies'
competitive advantage and strong
financial attributes.
Key lesson learnt: To create wealth from equity investment one should be willing
to give it time. Also, it's important to ignore the noise as markets go higher, as it is
easy to commit mistakes during this phase.
Past winners: Themes/sectors such as pharma, specialty chemicals, textiles,

NBFCs and consumer discretionary have done well for us.
Five-year outlook: The outlook for the next 3-5 years remains quite positive. As
economic growth picks up, we expect the corporate sector to start delivering
stronger earnings growth over the next few years. This, coupled with lower interest
rates, could drive superior returns from equity as an asset class compared to gold
and real-estate.
Stock tip: Invest in good businesses, not in stocks. Pick businesses you
understand well and which have a future visibility. Be patient and invest with a long-
term view. If you find following any of this difficult, use the mutual fund route for
equity investments.
Brief
A keen eye for detail, conviction to let opportunities play out and strong execution
are a must-have skills for managing a pure micro-cap mandate. Sambre
possesses these in abundance. He thrives on an unconstrained, free-wheeling
approach to portfolio construction afforded by his funds. Yet, stringent discipline is
also critical, else one can easily give in to the temptation of going lower down the
quality curve in search of higher alpha (benchmark outperformance). Sambre
knows that newer ideas can often turn out to be low-quality traps. Conducting the
due diligence to ascertain corporate governance standards before placing his
bets remains a top priority for him. Despite running an aggressive strategy, he has
been able to contain downside risk much better than most of his peers, resulting in
a healthy risk-reward profile across his funds. Sambre acknowledges that recent
market conditions have made it tougher to build and reduce positions in the
absence of sound investible opportunities. But he has enough experience and
skills to manoeuvre his portfolios accordingly and remain a winner in the coming
years as well.
Rank 2: Jinesh Gopani - AXIS MUTUAL FUND
Quick Bite
What's worked for me:

Disciplined approach, sticking to
quality, identifying leaders, weeding
out highly cyclical and highly
regulated sectors. Most importantly,
a long-term approach to portfolio
construction.
Key lesson learnt: Avoid non-scalable sectors and companies. regulated

sectors.
Past winners : Different stocks have worked at different times. Avoiding big
mistakes has been as important as picking big winners.
Five-year outlook: Bottom up approach with a focus on domestic demand-driven

sectors and companies
Stock tip: Invest in managements that understand their sector and business well
and have the leadership quality to navigate the good and bad phase of the
business to come out as winners.
Brief
Gopani has built a solid reputation over the years, successfully helming the equity-
linked savings scheme Axis Long Term Equity which has, by far, the biggest size
in its category and boasts of a superior return profile compared to peers. In his
stock picks, Gopani is a stickler for quality and scalability of the business model.
Management execution capability and ability to navigate business cycles is crucial
for him but, in the absence of a long history, he is comfortable starting off with
for him but, in the absence of a long history, he is comfortable starting off with
small investments and then gradually increase exposure levels as the story plays
out. Gopani insists that long-term orientation is a must for wealth creation and,
hence, avoids cyclical bets which are more trading opportunities than long-term
plays. As a part of research, Gopani makes sure that he visits the company's
plants and talks to industry experts to gain more insights into the business. He
prefers to run a compact portfolio, concentrating on only a few bets rather than
have a long tail in his funds. Gopani is cognizant of the size of the fund and admits
ensuring liquidity presents a challenge, but maintains it is a good challenge to
have and can be better handled owing to the lock-in structure of the scheme
Rank 3: R. Janakiraman - FRANKLIN TEMPLETON MUTUAL FUND
Quick Bite
What's worked for me: A

consistent investment framework,
evolved over the past two decades,
has helped identify businesses that
are attractive to investors in terms
of growth, quality and sustainability.
The framework appears to be most
capable of delivering better risk-adjusted returns over a business cycle.
Key lesson learnt: The past cycle threw up businesses that were attractive from
a growth perspective but lacked the ability to sustain such a performance. Such
cases have hurt the performance of the portfolio.
Past winners: Pidilite, Amara Raja, Finolex Cables, Voltas, MMFS and Repco
Home Finance.
Five-year outlook: India has the potential to sustain a high growth rate for a long
period, leading to attractive corporate earnings and hence stock returns.
Stock tip: A considered and consistent approach, in line with one's temperament
and capability, helps pick good stocks.
Brief
Taking over the reins of a fund from a highly successful manager is a tall order, but
Janakiraman has stepped into the large shoes of former star fund manager K.N.
Sivasubramaniam with aplomb. Janakiraman has proven his credentials over the
years to emerge as a dependable name in the mid- and small-cap segment. High
quality businesses, capable of sustaining growth across business cycles, are his
preferred bets. While he is comfortable paying a reasonable premium for the
embedded quality and growth prospects, he does not shy away from investing in
slightly out-of-favour ideas, if fundamentals are strong. Deploying capital in recent
times has proven to be a challenge, Janakiraman admits, but he has stood firm on
his resolve not to compromise on quality. It has only tightened the rigour in his
analytical process. He avoids business models that he is not comfortable with and
likes to maintain a reasonably diversified portfolio. A buy-and-hold approach
remains the cornerstone of his philosophy and he is willing to be patient for his
high conviction ideas to play out
Rank 4: Sohini Adani - SBI MUTUAL FUN
Quick Bite
What's worked: Focus on

longterm growth visbility.
Key lesson learnt: Avoiding

mistakes and not allowing them
mistakes and not allowing them
to compound is as important as
the right stock selection.
Past winners: Motherson Sumi, HCL Tech, Divis Laboratories, Ramco Cement,
Cholamandalam Finance, Maruti, HDFC Bank, Page Industries, Bharat Forge.
Five-year outlook: Going forward, the pace of growth recovery needs to surprise
positively to sustain a good momentum in the market.
Stock tip: Invest for the long-term and pay attention to the business' fundamentals.
Brief
Andani continues to deliver heathy performance across her funds. While she has
built a good track record in the mid-cap space with SBI Magnum Midcap, what
stands out is the impressive outperformance of the large-cap SBI Bluechip Fund. It
has among the best risk-return profiles and a stellar alpha for its category. In both
funds, Andani shows a remarkable ability to handle different market cycles, being
particularly effective in cushioning the downside during downturns much better than
peers. She employs a predominantly growth-oriented strategy, preferring asset-
light businesses with managements geared towards capital preservation. She is
cognizant of the heightened volatility and sharp market reactions of recent times
but insists that nothing should waver from long-term growth visibility. Doing due
diligence is more important than ever today, she argues, given the cost of making
a mistake is higher. Rather than look for newer ideas at a time when rich
valuations warrant exits from certain stocks, she insists on focusing more within
the existing portfolio and build positions wherever possible.
Rank 5: Mrinal Singh- ICICI PRUDENTIAL MUTUAL FUND
Quick Bite
What's worked: Discipline, bottom

up research, focus on data and facts,
merit-based business picks.
Lesson learnt: If you don't find the

right margin of safety, walk away.
Past winners: Auto ancillaries,
pharma, tech and banking.
Five-year outlook: We'll benefit from GST. Rerating of the Indian market is likely
in the long term. Possibility of volatile times, due to negative global news.
Stock tip: The best investment decisions are the ones which don't need too much
justification.
Brief
Mrinal is wedded to the value investing philosophy. It is this value consciousness
that forms the core of his approach across the funds he manages. He firmly
believes that the price we pay for a business is far more important than what we
buy, while business fundamentals rarely change, what does change is the price.
Low entry price and high margin of safety is the biggest risk mitigating factor,
apart from diversification and portfolio weighting, he points out. It is a path very few
fund managers frequent but Mrinal plies the trade with impressive results. ICICI
Prudential Value Discovery boasts of the best return profile in its category and has
been a consistent outperformer since Mrinal took over the reins in 2011. For
someone who has value inbuilt in his DNA, the sharp rise in stock prices in the
midand small-cap segment, across the board has presented a huge challenge.
His favoured hunting ground has provided very little room to play, but Mrinal
remains mindful of value traps. He puts a lot of emphasis on a management's
corporate governance standards and attitude towards minority shareholders, apart
from understanding the business dynamics.
Rank 6: Neelesh Surana - MIRAE ASSET MUTUAL FUND
Quick Bite
What's worked: A bottom-up, stock

selection approach.
Key lesson learnt: Not to invest in

low growth stocks purely because of
valuation.
Past winners: HPCL, Amara Raja, Natco, Bajaj Finance, IndusInd Bank.
Five-year outlook: The economy is on the right track to recovery. We expect a

broad-based growth in corporate earnings to revert to the long-term average.
Stock tip: Have a business-like approach to equity investments, and, so, try to
tune-out the market noise.
Brief
Surana's capabilities for generating alpha are evident from the extent of the
outperformance across funds he manages. Significantly, the two flagship funds
under his watchMirae Asset India Opportunities and Mirae Asset Emerging
Bluechiphave outperformed every year since their launch. Besides, his funds
boast among the best risk-reward profiles in their respective categories. He
strongly believes that this alpha is owed to being in the right pockets within
sectors, rather than playing on sector rotation and, hence, tends to take
aggressive positions in his high conviction bets instead of deviating from sector
allocation. The focus on company specifics has allowed him to separate the wheat
from the chaff even in the ongoing market rally which has seen significant
from the chaff even in the ongoing market rally which has seen significant
divergence across stocks and sectors. That is why he asserts that even if easy
money has been made in the mid-cap basket, there is always scope to find a
winner given the depth of the field. More homework is the need of the hour,
concedes Surana, but that should come easy for this canny stock picker.
Rank 7: Chirag Setalvad - HDFC MUTUAL FUND
Quick Bite
What's worked: A bottom-up

diversified portfolio of quality
businesses and holding them for
longer periods.
Key lesson learnt: It's critical to

invest in quality businesses.
Also, when there's a structural problem with a business, it's better to exit fast.
Past winners: Bajaj Finance, Amara Raja, Sundaram Fastners, Supreme

Industries, Grindwell Norton, Greenply, KNR, FAG, Bayer and Solar Inds.
Five-year outlook: The economy is likely to recover and should set the stage for
encouraging earnings growth.
Stock tip: Do basic analysis, avoid fads, study long-term historical performance.
Brief
For Setalvad, understanding the basics of the business is a top priority before
For Setalvad, understanding the basics of the business is a top priority before
investing. He doesn't hesitate from letting go of a story, if the business is beyond
his circle of competence. He goes past numbers and meets those managing
various operations of the company and also people from the same industry.
Setalwad's approach allows him to execute his funds' strategy across bull and
bear phases of the market. He prefers quality businesses and managements that
have an aptitude for sensible capital allocation. He admits that 2015 presented
challenges in finding value, given the run up that has played out across mid-cap
sectors and stocks. While relative value ideasstocks valued cheaper in
comparison to peershave been possible to spot, absolute value opportunities,
or stocks trading at a discount to intrinsic value, have been hard to come by, he
says. The stellar performance of his mid-cap schemeHDFC Midcap
Opportunitieshas taken its fund size beyond the Rs 12,000-crore mark, but
Setalvad is not perturbed. A heavily diversified portfolio helps him manage the
fund, he says.
Rank 8: Pankaj Tibrewal - KOTAK MAHINDRA MUTUAL FUND
Quick Bite
What's worked: Investing in

capital-efficient, scalable business
with reasonable valuations.
Key lesson learnt: Besides

identifying winners, avoid
mistakes.
Past winners: Bajaj Finance, IndusInd Bank, Whirlpool, V-Guard, Finolex Cables,
Atul Ltd, Ramco Cements, Motherson Sumi, Torrent Pharma, Divis.
Five-year outlook: Signs of economic recovery will support strong earnings

growth.
Stock tip: Besides profit, focus on cash flows and balance sheet.
Brief
He may not have a vast experience as a fund manager and a relatively small
corpus under his watch, but Tibrewal's relatively short track record is impressive
and reflects strong execution capabilities. His investment philosophy is
underpinned by a sharp focus on finding capital-efficient businesses that provide
scalability and are backed by competent management. He prefers businesses
that have the ability to reinvest cash accruals at higher rates of return and can
perform across business cycles to create wealth over the long term. Companies
that are focused on growth, even after achieving sizeable scale, make the grade.
He acknowledges that every company will go through tough periods but it is how
they come out of a testing phase that reveals the quality of management. Tibrewal
says meeting the lower rung managers at the company adds a lot of perspective
when understanding the business dynamics. He shows a distinct growth bias in his
stock picks and strives to maintain reasonable diversification as he reckons a
concentrated portfolio can cut both ways.
Rank 9: S. Krishnakumar - SUNDARAM MUTUAL FUND
Quick Bite
What's worked: Focus on simple,

scalable firms with sustainable
competitive edge, strong cash flows,
and return ratios.
Key lesson learnt: Be patient.
Past winners: Bajaj Finance, SRF, V Guard, Wabco, Fag Bearings, Ramco
Cements, Honeywell Automation, Ashok Leyland.
Five-year outlook: Very bullish on India growth story. A favourable liquidity

dynamic globally with low fund costs is pushing the search for yields.
Stock tip: Select asset classes and allocation and stick to them for life.
Brief
Another fund manager who has made his mark leveraging the small- and mid-cap
space, Krishnakumar is particularly adept at riding market upsides. This industry
veteran tends to focus more on opportunities arising from a changing environment
whether it is the changing demographic profile, lifestyle changes driving a
switch towards branded products or even regulatory changes that spur growth. He
strictly avoids capital guzzling businesses and companies with efficient allocation
of capital get his nod. He is also against dynamic churn in the portfolio. For
outperformance, stocks need to play out their growth, he reckons. Apart from stock
selection and their weight in the portfolio, it is their holding period which
determines the fund's return, insists Krishnakumar. He is comfortable deviating
substantially from the underlying benchmark if the stock has a superior growth
profile. However, he prefers to keep individual stock exposure limited to not more
than 5% of the portfolio to keep the risk profile low.
Rank 10: Ajay Garg - BIRLA SUN LIFE MUTUAL FUND
Quick Bite
What's worked: Bottom-up stock

picking.
picking.
Key lesson learnt: Successful firms

are the ones adapting with the
changing world.
Past winners: Bosch India, Maruti Suzuki, Biocon, Bayer CropScience, MRF,
Zee Entertainment and Capital First.
Five-year outlook: Despite global headwinds, a series of reforms have laid the
foundation for a great business environment in India.
Stock tip: Understand the nature of the business you are looking to invest in.
Brief
Garg has built a solid reputation for himself successfully handling two distinct
mandates in the form of tax savings funds and a dedicated MNC fund. Besides
valuations, he tends to focus on a company's management strength, product
range, consumer feedback, market size and share, free cash flows and corporate
governance. He prefers companies with consistent earnings growth over the
medium- to long-term and fully backs his conviction bets. The idea is to buy a
sizeable share of strong businesses available at reasonable valuations and
participate in their long-term growth. Typically, companies with a cash surplus find
a place in Garg's portfolio. While he places a lot of emphasis on a 360-degree
bottom-up research, he contends that, at times, it is equally important to look at
things from the top-down perspective while making investment decisions. Garg
also insists on holding a stock in the portfolio with an intention to own the business
rather than sell, subject to fundamentals remaining intact.

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8/29/2016 ET Wealth-Morningstar ranking: Top 10 mutual fund managers 2016 - The Economic Times

03:24 PM | 29 AUG SENSEX NIFTY 50 GOLD (MCX) (Rs/10g.) USD/INR CREATE

ET Wealth-Morningstar ranking: Top 10

Over the last few years, market sentiment has

HOW WE RANKED THEM

Only fund managers with a continuous five-year fund management experience

Risk and returns

Rank 1: Vinit Sambre - DSP BLACKROCK MUTUAL FUND

What's worked for me: Basic

management's passion towards

Past winners: Themes/sectors such as pharma, specialty chemicals, textiles,

Rank 2: Jinesh Gopani - AXIS MUTUAL FUND

What's worked for me:

Key lesson learnt: Avoid non-scalable sectors and companies. regulated

Five-year outlook: Bottom up approach with a focus on domestic demand-driven

Rank 3: R. Janakiraman - FRANKLIN TEMPLETON MUTUAL FUND

What's worked for me: A

Rank 4: Sohini Adani - SBI MUTUAL FUN

What's worked: Focus on

Key lesson learnt: Avoiding

Rank 5: Mrinal Singh- ICICI PRUDENTIAL MUTUAL FUND

What's worked: Discipline, bottom

Lesson learnt: If you don't find the

Rank 6: Neelesh Surana - MIRAE ASSET MUTUAL FUND

What's worked: A bottom-up, stock

Key lesson learnt: Not to invest in

Five-year outlook: The economy is on the right track to recovery. We expect a

Rank 7: Chirag Setalvad - HDFC MUTUAL FUND

What's worked: A bottom-up

Key lesson learnt: It's critical to

Past winners: Bajaj Finance, Amara Raja, Sundaram Fastners, Supreme

Rank 8: Pankaj Tibrewal - KOTAK MAHINDRA MUTUAL FUND

What's worked: Investing in

Key lesson learnt: Besides

Five-year outlook: Signs of economic recovery will support strong earnings

Rank 9: S. Krishnakumar - SUNDARAM MUTUAL FUND

What's worked: Focus on simple,

Key lesson learnt: Be patient.

Five-year outlook: Very bullish on India growth story. A favourable liquidity

Rank 10: Ajay Garg - BIRLA SUN LIFE MUTUAL FUND

What's worked: Bottom-up stock

Key lesson learnt: Successful firms

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