Mr. Manish Gunwani, (CIO – Equity Investments)
Nippon India Mutual Fund
Manish Gunwani is CIO - Equity Investments at Nippon India Mutual Fund. Manish graduated from IIT Chennai with a B.Tech and has a Post Graduate Diploma in Management from IIM Bangalore.
Manish has over 21 years of work experience primarily in equities spanning roles in equity research and fund management. He has also co-founded a technology company in the document management space.
During his stint at ICICI Prudential AMC, he managed two flagship funds of the mutual fund whose assets grew from $1bn to $5bn in 5 years. One of the funds grew from $50m to $3bn becoming the second largest fund in the industry. As deputy CIO he was instrumental in various aspects of asset management including setting up research processes, product strategy, developing talent of the team etc.
Manish has immense experience in equity research and has also spent two years working in a portfolio management company whose focus was midcaps.
Having traveled extensively across the world, Manish has attended many global investment conferences and seminars
1: What was the most prominent observation or learning you had from the markets in 2019?
Answer: The biggest point to ponder was the variance between the economy and the market. While historically the correlation between GDP growth and market returns is not very strong still the extreme variance was striking. The learning was primarily that timing markets in 1 year kind of timeframe is very difficult and it is better to take a long term view.
2: Which segments / sectors you feel offer the most value today?
Answer: Overall we feel mix of the following themes offer decent risk reward:
Cyclical plays on recovery in global and domestic economy
Asset heavy companies where industries are consolidating and ROEs are improving
Select secular plays in long term growth segments like consumer discretionary, retail lending etc.
3: How are you picking up funds in the current markets? What has been your broad strategy to manage the flag ship portfolios?
Answer: Based on the prevailing valuations we believe there is strong case for incremental allocation to multi-cap/midcap funds. Each fund is managed in line with its fund philosophy and investment mandate. Overall Growth at Reasonable Valuations is the key investment principle across portfolios, however within the fund framework the fund manager has flexibility to construct the portfolio which can generate optimal risk adjusted returns (as per the fund imperative/objective) over the medium to long term.
4: How do you make the decision to reduce stake or exit from a stock?
Answer: Essentially for each stock we have a fair value and usually the sell decision is based on that. Of course if there is a change in business or management we may change our view on the stock
5: How important do you feel is the role of the adviser for a mutual fund investor?
Answer: In the current context of short market cycles, increased global linkages and higher than normal volatility, the role of an adviser has become more important than ever before. Large segment of investors have started participating only in the recent past and may have been guided primarily by historical returns without having a complete understanding of the underlying risks. Various studies across geographies have established that proper asset allocation based on investor’s investment Goals & Risk appetite is an important enabler to achieve superior risk adjusted returns. In current times of higher volatility managing investor expectations is very important & key to successful investment planning. An adviser plays an important role in not only designing an holistic asset allocation plan for an investor but also ensures that investor is not swayed by short term market shifts and sticks to the decided plan.
6: What would be your advice to the investors for the new year 2020. What can they expect from markets this year?
Answer: I think the next 2-3 years there could be a phase where corporate earnings do better than nominal GDP growth which is a reversal of the trend for last few years. This along with lower interest rates can help a more broad based recovery. We believe most of the challenges witnessed in the last couple of years are bottoming out and a mean reversion is likely over the next couple of years. Looking ahead we anticipate a steady recovery/growth and hence investors should be patient, continue to remain invested – without attempting to time the markets. Diversification of investments across asset classes in line with one’s risk appetite along rational return expectations can go a long way in managing the market volatility.