The Portfolio Manager | Portfolio Construct Of PPFAS Flexicap Fund | NDTV Profit

Summary

In this insightful discussion, portfolio manager Rajiv Tuker of PPFAS explains his investment strategy, focusing on sectors like financials and select utilities. He addresses concerns about liquidity, valuations, and the impact of regulations on capital markets. Rajiv shares his views on the banking sector, preferring large private banks over PSUs and NBFCs due to cost of funds and diversification. He also discusses the cyclicality in capital markets, the potential of IT services, and the challenges of investing in real estate, emphasizing a medium to long-term investment thesis.

Takeaways

• 📈 The portfolio stance is not heavily tilted towards any particular sector or theme, but financials and select utilities are currently seen as attractive.
• 🏦 Despite leadership transitions and mergers causing temporary disfavor, the banking sector is considered undervalued with good asset quality and potential for growth.
• 🤖 Concerns about AI and generative AI's impact on the IT sector are not as severe as feared, with the belief that while some tasks may be automated, the need for human understanding and integration remains.
• 🏢 The real estate sector is avoided due to its project-based unpredictability and accounting challenges, making it less attractive for investment.
• 💼 The IT services sector is experiencing a period of subdued growth due to concerns about near-term demand, but past cycles suggest a potential resurgence.
• 💡 There is a preference for banks over NBFCs (Non-Banking Financial Companies) due to the cost of funds advantage and diversified opportunities in banking.
• 🌐 International exposure is present in the flexi-fund, which includes companies in software services, cloud computing, and digital advertising.
• 📉 The capital markets sector has seen regulatory actions, but the decision to reduce exposure was more due to concerns about cyclicality and high valuations rather than regulations.
• 📊 The mutual fund has underperformed in the last one year, but this is attributed more to market conditions and valuations rather than size or lack of global exposure.
• 🛑 The building materials sector, while predictable, currently appears expensive and is not heavily represented in the portfolio.
• 🚫 The fund manager is willing to underperform in markets where valuations are high, preferring to wait for better opportunities rather than chase returns.

Q & A

What is the current portfolio stance according to the transcript?

The portfolio stance is not sectorally tilted towards any particular theme more than the weightages might be, and the strategy is not high churn. It's largely a buy and hold kind of fund, with sectoral preferences for financials and select utilities due to attractive valuations and good asset quality.

How does the size of the fund impact its strategy and performance?

Despite being smaller in active AUM compared to larger fund houses, liquidity is not a challenge due to the fund's strategy of not requiring daily turnover of the full portfolio. The size has not significantly impacted the fund's performance, as underperformance has occurred even when managing smaller funds.

What is the view on the financial sector, specifically banks, according to the portfolio manager?

The financial sector, particularly banks, is seen as attractive due to cheap valuations, good asset quality, and concerns over growth rates being temporary. The portfolio manager prefers public sector banks over private sector banks and NBFCs due to the cost of funds advantage and diversified opportunities.

What are the concerns regarding the IT services sector?

There are concerns about the near-term growth of the IT services sector, which has led to subdued performance. However, the portfolio manager is not overly worried about the impact of AI and generative AI on the sector, expecting some impact but not as much as generally feared.

How does the portfolio manager view the role of banks in India's growth?

The portfolio manager believes that for India to grow, banks need to become bigger as they play a crucial role in funding real estate sales, car sales, and infrastructure. Near-term challenges are seen as temporary, and growth is expected to return as credit growth normalizes.

What is the portfolio manager's stance on the consumption FMCG space?

The portfolio manager does not favor the consumption FMCG space overall due to high valuations. However, there is an exception for a one-off company that was found attractive and continues to be held in the portfolio.

What are the portfolio manager's thoughts on the real estate sector?

The real estate sector is considered difficult to invest in due to its project-to-project basis and unpredictability. The portfolio manager prefers to spend time analyzing and investing in more predictable businesses, leading to the absence of real estate in the portfolio.

How does the portfolio manager approach the building materials sector?

While the building materials sector is more predictable than real estate, the portfolio manager has not invested in it due to valuations appearing a bit expensive. The sector is still noted for its potential, but current investments are not present.

What is the portfolio manager's view on the impact of regulations in the capital markets?

The portfolio manager sees regulatory measures as a part of life and not very unusual. The concern is more around the cyclicality of the capital markets rather than regulatory changes, leading to a reduction in exposure due to high valuations and cyclicality.

How does the portfolio manager address the underperformance in the last one year?

The portfolio manager attributes underperformance to valuations and the time it takes to find suitable opportunities rather than size. They are comfortable with underperformance in such markets and are willing to wait for the next big opportunity.

Outlines

00:00

📈 Portfolio Stance and Sectoral Preferences

The speaker discusses the current portfolio stance, emphasizing a sectorally tilted approach rather than strict adherence to index weightages. They highlight the attractiveness of the financial sector, particularly due to cheap valuations and good asset quality, despite concerns over growth rates. The speaker also touches on the challenges faced by the banking sector, including leadership transitions and the impact of RBI's tight liquidity policies. Additionally, they mention a preference for public sector banks over NBFCs due to the cost of funds advantage and the diversified opportunities within the banking sector.

05:02

🏦 Banking Earnings and Market Impact

This paragraph delves into the broader implications of banking sector earnings on the market. The speaker expresses a medium to long-term investment thesis, asserting that India's growth is intrinsically linked to the expansion of its banking sector. They acknowledge short-term challenges due to global inflation concerns and the RBI's tight liquidity policy, but they anticipate a return to growth as these issues normalize. The speaker also addresses the cyclical nature of capital markets and the impact of regulatory changes, suggesting that their investment decisions are more influenced by valuations and cyclicality rather than regulatory actions.

10:02

💼 Financial Services and Regulatory Impact

The speaker reflects on the regulatory environment affecting financial services, including capital markets and insurance. They note that while regulations are a part of every sector's life, their concern regarding capital markets is more about its cyclical nature rather than regulatory changes. The speaker also discusses the impact of high valuations on their investment decisions, particularly in the context of capital market players, and explains their strategy of reducing exposure due to these concerns.

15:03

🤖 Tech Sector Outlook Amidst AI Advancements

The speaker provides insights into the tech sector, particularly IT services, amidst the rise of AI and generative AI. They express a nuanced view on the impact of AI, suggesting that while some automation is possible, the need for understanding business cases and the human element in software development will persist. The speaker also mentions the trend of setting up captives in India by large players, which could potentially impact the outsourcing model and the IT services sector.

20:06

🏠 Real Estate and Building Materials - Absence from Portfolio

The speaker explains the absence of real estate and building materials in their portfolio, citing the unpredictable and project-based nature of the real estate sector as a challenge for investment. They contrast this with more predictable businesses like FMCG and express a preference for sectors where the business model is more consistent and less subject to project-specific risks.

25:08

📉 Market Performance and Portfolio Management

In this paragraph, the speaker addresses the topic of market performance and portfolio management, particularly in the context of underperformance over the last one year. They dismiss theories attributing underperformance to size or lack of global exposure, instead focusing on the high valuations in the market as a reason for their cautious approach. The speaker is content with underperforming in such markets, preferring to wait for better investment opportunities.

📊 Market Overview and Sector Performance

The final paragraph provides a snapshot of the current market situation, with the Nifty 50 and the Sensex marginally down. It highlights the top contributors and losers to the Nifty 50, as well as the sectors that are performing well or lagging behind. The speaker notes the FMCG sector's positive performance and the underperformance of sectors like PSU banks, metals, real estate, communications, pharma, media, and banking.

Keywords

💡Portfolio Stance

Portfolio stance refers to the overall strategy or positioning of an investment portfolio in terms of sector allocation, risk tolerance, and market outlook. In the script, the speaker discusses the portfolio stance in the context of sectoral tilts and whether the portfolio is aligned with market weightages or follows a different strategy. The discussion indicates a preference for certain sectors like financials over others based on valuation and market conditions.

💡Liquidity

Liquidity in finance refers to the ease with which an asset or security can be converted into ready cash without affecting its market price. The script mentions that liquidity is not a challenge for the speaker's investment strategy, implying that they have the flexibility to buy or sell assets without significantly impacting their market value, which is crucial for managing a fund with a significant AUM (assets under management).

💡Valuation

Valuation is the process of determining the value of an asset or company, often in the context of investing. The script discusses valuation in relation to the financial sector, where the speaker finds the sector attractive due to its cheap valuations, good asset quality, and concerns over growth rates, which have made it temporarily out of favor with investors.

💡Active AUM

Active AUM represents the assets under management that are actively managed by a portfolio manager or team, as opposed to passively managed funds that track an index. The script mentions active AUM in the context of the speaker's fund size relative to larger fund houses, indicating the scale of their operations and the potential impact on their investment strategy.

💡Financials

In the context of investing, 'financials' typically refers to companies in the financial sector, such as banks, insurance companies, and investment firms. The script highlights the financial sector as an attractive space for investment due to its undervalued status, good asset quality, and temporary disfavor due to concerns over growth rates and regulatory actions.

💡Consumption FMCG

FMCG stands for Fast-Moving Consumer Goods, which includes non-durable goods that are sold quickly and at relatively low cost. In the script, the speaker mentions not liking the consumption FMCG space due to high valuations, but they have invested in a specific company within the sector that they found attractive, demonstrating a stock-by-stock approach to investment.

💡IT Services

IT services refer to the various types of information technology services provided by companies to other businesses or individuals. The script discusses concerns over the near-term growth of IT services due to market conditions, which has led to subdued performance. However, the speaker also notes that some companies in the pharma sector are reasonably valued, indicating a selective approach to investing in this area.

💡Private Sector Banks

Private sector banks are banks that are not owned or controlled by the state. In the script, the speaker compares private sector banks with PSU (Public Sector Undertaking) banks and NBFCs (Non-Banking Financial Companies), expressing a preference for certain private banks due to their scale, technology platform, and range of services, as well as the cost of funds advantage over NBFCs.

💡Cyclicality

Cyclicality refers to the tendency of financial or economic time series to experience regular and predictable fluctuations over time. The script discusses the cyclicality of capital markets, where the speaker notes that earnings for capital market players can be very strong in a bull market and dip significantly in a down market, leading to a reduction in exposure to this sector based on valuations and cyclical trends.

💡Regulatory Measures

Regulatory measures are actions taken by regulatory bodies to control or manage a particular sector or market. The script mentions recent regulatory actions in the capital market space, including changes to brokerages. However, the speaker views these as part of the normal regulatory cycle aimed at reducing risk and improving the market, rather than a reason for concern.

💡Generative AI

Generative AI refers to artificial intelligence systems that can create new content, such as writing code or generating images. The script discusses concerns that generative AI could reduce the need for human programmers, but the speaker believes that while there will be some impact, it will not be as significant as feared, as understanding business cases and integrating code requires human expertise.

💡Captive Centers

Captive centers are offshore development centers set up by companies to handle their own IT and business processes, rather than outsourcing to third-party providers. The script mentions the trend of larger companies setting up captives in India, which could impact the IT services sector by reducing the need for outsourcing and affecting the demand for IT services.

💡Real Estate

Real estate refers to land and the buildings on it, and the script discusses the challenges of investing in the real estate sector due to its project-based nature and the unpredictability of project success. The speaker explains that the real estate sector is not included in their portfolio due to these challenges and the difficulty in analyzing and predicting success in this sector.

💡Underperformance

Underperformance occurs when an investment or portfolio returns less than a benchmark or peer group. The script addresses the fund's underperformance over the last year, with the speaker attributing this to the high valuations in the market, which make it challenging to find attractive investment opportunities, rather than to the size of the fund or lack of global company exposure.

Highlights

The portfolio stance is currently not sectorally tilted towards any particular theme, and weightages are not disregarded.

Liquidity is not a challenge, and the strategy is not high churn, with a buy-and-hold approach.

Active AUM is significantly smaller compared to larger fund houses, impacting the approach to liquidity and portfolio management.

Financials are currently an attractive space due to cheap valuations, good asset quality, and concerns over growth rates.

Leadership transitions and mergers in the banking sector have temporarily made it unattractive, but it is expected to offer great value.

IT services are of concern due to near-term growth worries, while pharma has some reasonable names.

Private sector banks are preferred over PSU banks and NBFCs due to scale, technology platform, and cost of funds advantage.

Banks are favored over NBFCs for diversification and access to float funds.

Banking earnings are expected to pick up as inflation worries subside and credit growth normalizes.

Regulatory actions in the capital market space are seen as part of the regular tweaking of guidelines to reduce risk and improve consumer outcomes.

Cyclical nature of capital markets is a concern due to the impact on earnings during bull and down markets.

The absence of direct investment in insurance companies is due to indirect exposure through banks and holding companies.

Tech sector, especially IT services, faces challenges with AI and generative AI, but the impact is not as feared.

Smaller IT companies have seen significant valuation increases, leading to exits based on high valuations.

Real estate and building materials sectors are absent from the portfolio due to project-based unpredictability and high valuations.

Underperformance in the last one year is attributed to market conditions and valuations rather than size or global exposure.

Transcripts

versus just the prospects of business

right in any underlying beted that you

take what is the portfolio stance

currently I mean is it is it sectorally

tilted towards any particular theme more

than what the weightages might be do you

pay regard to those kind of weightages

also or are you not quite playing paying

regard to weightages

uh so n liquidity is not really a

challenge valuation is so uh

we get picked on because we run a single

strategy across two schemes uh in the

equity space so we have a flex Cap Fund

and tax fund which largely mirrors the

uh Flex cab fund uh now in terms of

active AUM you would be maybe one six or

17th the size of the larger fund houses

that are there in some cases maybe I

don't know maybe even if you add

passives then we may be even smaller so

uh liquidity is not so much of a

challenge again our strategy is not a

high churn it's not that every day I

need to turn over the full portfolio by

selling something and buying something

else it's largely been a b hold kind of

fund even from the time when we were

smaller uh sectorally uh I think the

attractive space is the financials uh

right now where the valuations are uh

cheap where the uh asset quality is

quite good and the only thing that

people are concerned about is the growth

rates where RBI has been trying to slow

things down in terms of the keeping the

liquidity a bit tight raining in the

credit growth uh again there have been

leadership transitions in uh a few Banks

uh there has been a merger which one of

the banks went through so because of

these specific reason

temporarily the space is out of favor

but I think that space is uh looking to

be of great value but otherwise uh as

such we look at each stock on its own

Merit uh so while we overall don't like

the consumption fmcg space given the

valuations but we have a oneoff company

over there uh which looked attractive

when we added meaningfully to it and we

continue to hold that so the con struct

is on a stock by stock basis uh in terms

of sectors I think the financials and

select utilities uh are looking good uh

IT services again there is some concern

about near term growth because of which

they were subdued a while back uh Pharma

some names are reasonable so yeah that's

the sector clearly I mean when I when I

just scan through what you've done in

the recent past as well right April

versus may you bought in or you added

onto some of these large banking names

uh Pure Play Banks private sector Banks

so the question that emanates is do you

like private sector Banks versus PSU

Banks do you like the large private

Banks versus the midsize Banks and do

you like the large private sector Banks

versus nbfcs so I've kind of given the

three subsets on the banking side per se

give us some sense of the

construct yeah so so in the banking

space across private and psus uh there

are to my mind five banks four in

private and one in public sector uh

which have a good amount of scale which

have a good uh technology platform which

have a range of all the services that

are there not only in banking but uh

other Allied spaces as well things like

life General Insurance uh Asset

Management Securities brokerage

Investment Banking and so on so uh

largely it's between these five banks uh

we prefer the public SE we prefer the

private sector space But even public

sector is not bad and it's reasonably

good uh as far as the nbfc space

goes uh we have had a preference towards

the banking space instead of nbfc purely

on account of the fact that the uh cost

of fund Advantage I think is significant

uh for the banking space uh even in

terms of term deposits a private sector

bank or a public sector bank will get

term deposits at much lower rates than

what nbfc would uh typically incur and

with increased uh technology and

computerization there is scope for

reduction in uh cost to income ratio

over a period of time for uh Banks as

well whereas uh access to float funds is

a definitely a challeng all for the nbfc

players also what happens is typically

nbfcs tend to play in one particular

segment so you'll have Micro Finance

players or you'll have gold loan players

or you'll have commercial vehicle

Finance years whereas in the bank you

get a diversified uh opportunity in

terms of the financial sector so yes our

preferences towards Banks got it uh well

well noted and uh could could Banks uh I

mean uh this morning we were talking to

a sside expert uh after especially after

the banking q and updates the way they

have come Rajiv and the belief is that

if banks miss their earnings in the

quarter or for the year at large it's

very difficult for the rest of the

sectors to take up that mantle because

it's not that earnings are looking Rosy

across I would just like your broad

brush view on banking earnings and

whether you believe that uh they will

pick up and if not or if let's assume if

in the event that they were to slip can

can some other sectors come to the four

and pick up that tab or is it going to

be difficult for earnings if banks don't

live up to their

billing well is different players in the

market space operate on different time

Horizons there are people who Focus uh

meaningfully on uh what this quarters

earnings will be and uh whether uh the

actual reported number will exceed the

expectation or will be lower than the

expectations and things like

that uh our uh investment thesis is more

medium to longer term where we are

saying that if India is to grow it

cannot grow without uh the banks

becoming bigger so if real estate sales

have to happen if Car Sales have to

happen if infrastructure is to get

funded uh there will have to be lending

uh from the bank in uh space a near term

uh yeah it's challenging given not

because of Any uh thing wrong with the

sector near term is a challenge because

of the global concerns around inflation

and the uh RBI sance of uh keeping

liquidity on a tight leash and slowing

down the unsecured uh lending uh largely

it's been on the nbfc side but even for

banks to to slow down that space so uh I

think it's temporary as uh inflation

worries go away as the credit growth

normalizes I think you'll see growth

coming back about the overall Market

earnings so we don't track each and

every Nifty company that is there so I

don't have a market-wide estimate uh but

from what uh I'm seeing is that the

sales growth are slow earlier there was

this margin uptake which happened

because of input cost uh easing I think

that is maybe behind us so it could be a

bit subdued quarter the way I look

at okay and so many other sectors to

talk about as well since you mentioned

some but I would love to extend this

conversation before we take the first

break Rajiv to and and uh to the other

aspects of the financial services

space um Capital markets because uh you

had a fair degree of presence there you

probably still do in some fashion but um

there has been a fair degree of

regulatory

action uh within the Capital Market

space um uh as recently as last couple

of weeks ago um even on the brokerages

as well um now I would love to

understand how do you think of the

various aspects of the non-lending

financials Capital markets first maybe

even I'll throw in an insurance out

there because you traditionally used to

have if I'm not wrong um an insurance uh

presence in your portfolio which is not

which I don't we have had uh uh

investments in companies which have

insurance companies so we have uh Banks

which own insurance companies and we

have a holding company which has a uh

insurance subsidary so we do have

indirect Insurance presence but no

direct investment in the insurance G

call what about Capital markets Raj

yes so yes there have been regulatory

measures but uh I like to say today

unless you are maybe a seller of luxury

handbags uh almost every sector is

regulated so uh if you are in the

automobile space for example uh what

happens to emission Norms what is the

policy around hybrids what is

policy around uh electrification will

definitely affect you uh so uh whether

it be banking whether it be Capital

markets uh whether it be Pharma everyone

is affected by some regulation or the

other and it's a part of life uh Capital

markets uh so the regulations that have

come in I don't think are very very

unusual because periodically there has

been a tweaking of guidelines uh in

terms of reducing risk in the

marketplace or uh improving competition

or making things better for the consumer

so all these things have been going on

for a very very uh long time so

shortening of the settlement cycle and

so on this measure where a certain

amount was being charged to the End

customer which was higher than what they

were actually paying to the exchanges I

think had to be remedied somewhere uh

because in a way uh it's not transparent

and it's not fair to the customer uh our

concern around uh Capital Market has

been more around the cyclicality rather

than the regulatory

changes uh it's uh so n it's interesting

to see that let us say if the same

number of shares traded let's say

company a every day the volume is 100

shares now when the price of uh the

share is 10 then the traded volume is

1,000 and when the price goes to 20 the

traded volume goes to 2,000 so in a bull

market the uh volume goes up the value

goes up everything goes up and the costs

don't go up in line and so the earnings

are very very strong for all the Capital

Market players uh be it the exchanges be

the stock Brokers be the asset

management companies uh and in a down

Market those earnings uh have a

significant dip so we have had a few

years of uh extremely strong earnings

and uh again share prices have gone up

significantly so we have been reducing

exposure in this SP purely on account of

the cyclicality and the valuations

rather than concerns around

regulations okay so so so okay so the

the supposed exit from one of the player

or maybe a couple of them is not because

of the regulation thing but because of

the valuation uh uptick that we we have

been trimming it for a while for before

the regulation came in we have been

trimming it for a while got it okay

Rajiv stay on I would love to pick your

brains a bit more uh but we need to slip

into a quick commercial break come back

and try and do that

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welcome back to the portfolio manager

you know the thing the less has spoken

about our portfolio manager today

um it's it's difficult to do that simply

because from very modest Beginnings uh

ppf has now racked up an AUM which could

be the Envy of a number of people and uh

um last year uh they probably clogged in

uh 37 38% Returns versus the index for

39 but if you look at the mutual fund

returns as you should over a threee and

a 5year period with this higher AUM as

well they have beaten the index

comfortably and therefore it becomes

important to get a sense of how Rajiv

Tucker thinks about the portfolio

construct in the current market scenario

and hence uh we requested him to come on

the come on air today and talk about it

it's been a fascinating conversation

thus far Rajiv I look forward to some

more minutes of insights from you um I

would love to come and talk a bit about

tech Rajiv I know you traditionally

believe in keeping things simple but

that you know it's difficult to keep

things simple with it simply because

there's this whole talk of AI and how

would Indian it uh work within that

whole landscape can earnings come back

is there value right now because these

are great cash flow generating companies

multiple arguments right and the Bulls

say that we've seen enough instances of

past challenges which they have

navigated through uh I don't see too

many large it names except for one or

two within your top 15 Holdings um now

why is that are you underwe the sector

if yes why

so so n one of the things in the flexi

fund that we have is we can invest some

money overseas and abroad we have uh

companies which uh are either uh

software service providers so operating

system and office productivity Suites or

they're in the cloud computing space or

digital advertising and so on so from

that point of view in the flex fund we

don't have uh too many uh IT services

companies especially the larger ones in

the flex fund where we don't have the

international exposure we do have uh

those companies in our

portfolio coming to the uh outlook for

these stocks so as you mentioned there

have been multiple uh Cycles in the past

uh so earlier you had the main based uh

Computing environments then it moved to

the uh Network and uh client server kind

of architecture uh later on there was

this big shift towards the internet and

multimedia and uh so on after that you

had the whole wave of uh social media

cloud and analytics and uh those kind of

things uh so periodically there have

been these transitions uh in the uh IT

services space and the people have had

to relearn the newer Technologies the

organizations have had to reinvent

themselves and they are more or less

used to it so you have this period these

periods of strong demand and uh then

demand taper off and then it again comes

back I think this time it'll be somewhat

similar uh the one big concern that

people have is around the uh Ai and

generative AI where uh there is this

fear that uh these large language models

can write programs and you won't need so

many people to uh build

software so of course some of the things

can be automated and uh uh some code can

be return so debugging can be uh easier

in some cases or uh some routine tasks

can be automated but the whole thing

about understanding the uh business case

Translating that into the different

steps that are required stitching

together all the code testing it out all

those things will be required so I'm not

so worried about the uh generative way I

think there will be some impact but not

as much as generally is feared uh

another Trend which is a bit of a

dampener is the uh setting up of

captives here in India so uh what some

of the larger players are doing is

rather than Outsourcing the activity

they are themselves setting up offshore

uh Development Centers in places like

India and they are themselves taking

people on their payroll uh so that uh

trend is something that one needs to

watch

out you in the past had likeed some

smaller it name some product companies

Etc uh there is this whole ER and space

that is now formed out as well um you do

not like those pockets as well or are

they just

expensive so some of the uh smaller

companies that we owned went up like 6

7x in some cases 10x in a very short

span of time so valuations became too

much of of a challenge so we exited

purely based on

valuations the businesses are doing

reasonably okay got it rajie uh for

somebody who's who told I mean we spoke

in this interview about how that if

India has to grow if real estate has to

sell uh then banks have to grow but you

did invoke real estate sales and for a

sector that is in a bit of a frenzy when

it comes to pre-sales or quarterly sales

I notice that it's conspicuous by its

absence in your portfolio either real

estate or building materials why

so uh so n it's been a difficult sector

to invest in uh so so if you are buying

let's say a uh fmcg company you you buy

a soap manufacturer you know that uh

like

clockwork the manufactory will keep

manufacturing it they will uh

distributed by the logistics and supply

chain to the uh stores and it'll get

consumed and you know the margins you

know the ad spend it's a predictable

business real estate is very unlike that

one is it works on a project to project

basis so let's say in uh Mumbai a

developer could do well in western

suburbs and get stuck in some premium

housing in uh South Mumbai so you have

these kind of things happening so uh a

lot of people invest at the SPV level at

the project level instead of the listed

company those people seem to be doing

reasonably okay but otherwise the

uh money keeps getting redeployed at the

company level and it keeps going through

these up and down Cycles uh again the

accounting is tough in this space

because Pro percentage of project

completion and what are the assumptions

and uh things like that it's just that

time is better spent elsewhere uh

analyzing and investing it's too tough

in that sense Fair call um okay okay

even building materials Raj building

materials is an interesting space so we

have looked at it in the past for some

reason we don't have Investments there

and again things are looking a bit

expensive in that space but uh that is

more or less a predictable business so

okay anything and everything uh to do

with it got it okay tiles cement forets

everything noted Raji my one final

question um a lot of people talk about

this right I I I mentioned this at the

start of the second segment that you

look at mutual fund Investments over 3

five years and not over one year and and

even with this High Bas you've done so

well uh the question that comes in that

in the last one year if there has been

um a a percentage point of

underperformance is it attributable to

size is it attributable to the fact that

you don't have as much global companies

exposure as you used to and so many

theories float around I would love for

you to talk about it because it best to

hear it from the horse's

mouth so you are being too kind n

attributing size to the underperformance

I have

underperformed uh by much bigger margins

when I used to run a 100 CR fund this is

way back in 2007 so that time if memory

SS me right uh the portfolio was up

around 35% and index was up some 70% so

you were doing half of what the index

was doing uh yeah as I said more than

liquidity valuation is a challenge

uh if you want to buy shares you just

have to press a button on the dealing

terminal and shares will get bought that

that is not the challenge the challenge

is that uh the prices at which stocks

are trading right now generally uh means

that you take that much longer to deploy

and for opportunities to come your way

and uh to give a cricket analogy if uh

you need maybe four runs in over why

would you risk losing a wicket trying to

hit a

six happy to underperform in such

markets yeah and and sit on a pot full

of cash to wait for the next big

opportunity but great to understand that

perspective Rajiv uh thank you so much

uh thank you so much for joining us on

the show and giving us the lowdown on

how you think about portfolio construct

currently really appre appreciate the

time pleasure thanks well that's the

view from ppfas Rajiv tuer SE and

director of the AMC talking about uh the

portfolio construct in the current

scenario hope you found it as useful as

I found it while doing the show

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hello and welcome welcome you're

watching Market IQ and I'm your host

Palina let's take a quick look at where

the markets are at first well it's a bit

of a slow start to the week the nifty 50

as well as the sensex marginally in the

red they're both currently down by just

about a tenth of a percent uh let's have

a quick look at the top contributors to

the nifty50 was truly moving the

benchmarks it's R that's in the green uh

along with ITC infosis and H uh among

the losers are HDFC bank once again

along with Titan TCS and divies uh

currently we're seeing the Reds

outnumbering uh the greens uh the

advances uh currently about 19 stocks in

the nifty50 that are in the advances

while about 30 slightly over that 31 uh

that are declining uh let's also have a

quick look at the top performing sectors

uh now we're currently seeing Nifty PSU

bank that's lagging the most it's down

by about a percent uh a little over a

percent actually along with metal realy

Communications Pharma media bank and

mnc's these are all in the red what's

performing well is fmcg this uh the

sector is up by about