Reliance Vision Fund

Category: Flexi Cap
Investment Style: Large Growth
Investment Process: The fund manager looks for companies that he views as attractive growth opportunities at a reasonable price.
Fund Manager: Ashwani Kumar Morningstar Analyst: Kavitha Krishnan

Reliance Vision Fund – Kumar plies a growth-at-a-reasonable-price strategy. He typically scouts for companies with strong and sustainable business models. He will be flexible with valuations and pay what he thinks is a fair price, given the company’s growth prospects. He tends to take a two- to three-year view on stocks and focuses on factors such as ROE and ROCE when evaluating companies.

The research-orientation and qualitative overlay seeks to identify companies with strong management teams, robust business models, and sustainable competitive advantages. The top down approach is also important; factors such as the interest-rate scenario, barriers to entry, pricing power, policy measures, and expected consumption/ spending patterns are considered when investing.

The process is not without risks, given the manager’s willingness to be benchmark-agnostic and take big stock and sector bets. Ashwani will tend to buy into stocks based on the "best fit" for his portfolio even if it contradicts the opinions of the internal research team. Overall, we believe the process is solid.

The manager typically aims to invest in differentiated businesses and gain a first-mover advantage in terms of identifying the stock as well as ensuring that he is buying at the right price points. Large caps stocks currently constitute about 80% of assets, while the top 10 holdings constitute 40%-60% of the total assets. Kumar’s penchant for diverging from benchmark weightings and willingness to take active sector bets results in a portfolio that is significantly distinct from that of its peers.

In addition to remaining concentrated at a sector level, the portfolio also witnessed a significant move away from healthcare and energy into autos and banking in the past two years. This move is in line with the manager’s view that these sectors offer a better risk/return trade-off and will help capitalise on the India growth story. The fund is typically run as a sector-heavy portfolio consisting of about 30-40 stocks, with a major portion of its AUM invested in three to four meaningful sectors.

A typical investment would be a company that operates in diverse areas such as engineering and auto, catering to both domestic and global clients. From a top-down angle, he expects the auto sector to benefit from rising spending power in smaller cities. He expects auto companies to benefit from a robust product portfolio, low-cost models, and extensive distribution.

In rising markets, Kumar may indulge in short-term trades and tactical plays and tends to trade in the same set of stocks to capitalise on short-term opportunities rather than investing in new names.

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