At a time when many investors are trading directly in stocks, Anup Maheshwari, CIO and Joint CEO of IIFL MF underlined how mutual funds follow vigorous institutional processes that give them an advantage over do-it-yourself investors.
Among such major advantages that a fund house possesses are domain knowledge, process driven investment with the help of a research team & organizational structure and access to management of companies.
At Cafemutual Confluence 2020 Investment Marathon, Anup said that fund houses have a checklist for selecting stocks.
The checklist includes going through the details of the industry that the company operates in, taking a look at the competitive landscape of the company, monitoring the risks involved in the business, assessing profitability while keeping in mind the valuations of the company and finally talking with the management of the company to complete the assessment process.
He explains that the fund houses follow the process rigorously with the objective of not only generating good returns but minimizing losses as well.
Anup is of the view that as a part of this process, fund houses get to interact with the management of the company, which is probably one of the most critical parts of picking stocks. And this is possible because the management is willing to talk to institutions.
Further, Anup feels that a good AMC does not rely on any individual's investment style but follow a robust institutional investment process.
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