As CNBC-TV18 turns 20, we launch a 10 episode series 'Fund Anatomy' where investors can ask 20 questions to their fund manager. In this episode, catch Harish Krishnan of Kotak MF in conversation with Sumaira Abidi.
Speaking about polarised market Harish Krishnan said, “The way we look at is, this is not the first time it has happened and every cycle we have always had this kind of characteristic. Our sense is as the growth broad-based in the economy will start reflecting into the capital markets you will start seeing money move out from the pockets of overvaluation of the comfort zone, where everybody is kind of postered, into the broader markets."
While talking about the size of funds Krishnan said, “The fundamental characteristic of a business is not determined by its size. In our opinion, the fundamental characteristic of business is whether it can make money ahead of its cost of capital and deploy some of that extra money that it has made back into the same business and that is to whether it is small-cap, midcap or a large-cap.”
He further added, “It is important to understand is that the cost of capital varies quite significantly between large companies and a mid and a small company. We are not of the camp that just because you have a very long horizon of say 10-15 years you should put all your money into small caps just because they have the greatest potential of growth. We would still think that it would make sense to think from asset allocation thing.”
Speaking about large-cap funds he said, “As much as we look at the names in a portfolio I would stress that it is far more important to look at the weights and the time that we give for those weights to play out. We are not a big believer in constantly churning the portfolio, we need to give business time because we expect investors to give us time. So, therefore, it is only prudent that we ask ourselves to give time and patience to investments for them to deliver.”