Sanjiv: What do you need to check in a portfolio of funds before investing?
Sankaran Naren: You need to check whether the fund is investing as per its mandate. For example, ICICI Prudential Dynamic Fund is a conservative equity fund. If you see all kinds of concept stocks in the portfolio, then you need to worry. A mid-cap fund investing in a large-cap should be avoided. You also look at returns. If returns are too high relative to the index, then you need to know the reason as risk taken may be too high.
Sankaran Naren, chief investment officer (equity), ICICI Prudential MF
Raven: What are the sectors you will be watching before the Budget?
Sankaran: We believe that the budget would favour infrastructure and tax some of the consumption sectors.
KEA: You said Dynamic Fund is a conservative fund, but your fund can invest all of its money in cash, unlike other equity funds, right? How does that make it conservative?
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It does endeavour to be conservative. However, from a tax point of view, it has to have 65% equity weightage. The fund is conservative on stock selection, sector selection and strategy. We have been underweight on real estate after 2007. In 2007, we were underweight on capital goods when valuations were high. Similarly, we trimmed commodities in the first half of 2008 as valuations increased.
Bala Murali: What is your view on FMCG sector? They underperformed recently.
Sankaran Naren: We believe it is one of the best sectors to get moderate returns with low risk. However, the Budget risk on tobacco sector is high.