What does a fund manager do in his free time? If you are thinking ‘reads finance books’, you are right. Vinay’s favourites are Peter Lynch (One Up on Wall Street), Philip Fischer (Common Stocks and Uncommon Profits) and Warren Buffet.
Vinay’s love for equities goes back to his college days. Living in a joint family, he saw everyone pursue their own business and invest in equities on the side. He thought that was the norm. A summer internship with a broking firm taught him that equities could actually be a fulltime career! Determined to pursue equity investing as a career, he opted out of college placement as he did not want any other role. However, job openings for equity analysts were scarce. After some initial struggle, he landed an opportunity with a broking company. And there has been no looking back since. During the next 15 years, he worked in broking and asset management companies before joining Union MF as CIO in April 2018.
Typically, Vinay spends the first half of the day with his team discussing investment opportunities. They use ‘BMV’ (business – management – valuation) as the primary filters for stock selection. The final filter is common sense that is checking to see if the company is too good to be true.
Vinay follows a process driven approach in investing. Believing that market is a slave of fair value, the Union MF team has developed a proprietary fair value model, which estimates the return potential of a company over the next five years. This they compare with the current price of the company to determine whether it makes sense to invest in the stock. According to Vinay, portfolio construction process is akin to cooking. For the perfect dish, just having right ingredients is not enough; they need to be added in the right proportion and at the right time.
Vinay expects, equity markets to grow at a slower pace in the coming year. Though accommodative monetary policy and Fed’s announcement of no further rate hikes are major positives for markets, softness in growth, slowdown in domestic consumption and government expenditure are some near-term concerns, according to Vinay. He expects markets to deliver double digit returns in the coming years.
Vinay’s message to investors is trust your financial advisor. “Exiting at the wrong time is the main reason for low investor returns. Do not be swayed by temporary corrections; rather focus on long-term goals,” he said. In the same vein, he urges advisors to educate their clients on equity investment risks so that they are not caught by surprise.
When Vinay is not busy thinking about investments, he loves to watch Bollywood comedies. “You don’t have to think, that’s the best part,” he says referring to his love for comedy movies. Considering that his typical day is filled with analysis, this must be like a detox. Andaz Apna Apna is his all-time favourite movie.
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