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What is your medium-term outlook on equity markets?
Our outlook on Indian equities remains positive in the medium-term. India is currently enjoying the confluence of the macro and micro tailwinds with ~7% GDP growth, moderating inflation, range-bound crude prices, easing 10-year G-sec yield, stable currency and resilient corporate earnings. The Nifty Midcap 100 index and the small cap index are trading at a 12-month forward P/E ratio, which is at a premium to their long-term average, even though the benchmark Nifty doesn’t command such premium.
While valuations are elevated, this is a function of:
- Better quality of growth and free cashflows of corporates
- Post-covid, Indian corporate earnings have been better than emerging markets, with a better deleveraged balance sheet
- Strong domestic flows in the India markets
We continue to believe that the investment environment going forward would be a ‘stock picker’s market’ and would separate the men from the boys. There could be instances where companies operating in the same sector may end up reporting diverse set of financial results. Our approach in such an environment would be the same as we have been following over the last few quarters. It would revolve around the thesis to identify companies basis the ‘bottom up’ approach.
Many MFDs are finding it difficult to deploy lumpsum money in equity funds. What is your view on this?
Looking at the current market conditions, investing lumpsum requires conviction. In highly volatile or uncertain markets, a phased deployment may be more prudent. Understanding the client's risk tolerance and investment comfort level is also essential. Some clients may prefer to invest gradually to avoid the stress of potential market swings, while others may be comfortable with a lump sum investment if they have a long-term perspective. ITI Large & Mid cap Fund through its active portfolio management approach endeavors to create a durable portfolio for a long-term holding, which aims for wealth creation over market cycles making it a prudent choice for lumpsum and systematic investments.
What is the rationale for launching the ITI Large & Mid Cap Fund?
Despite global challenges and the lingering effects of COVID-19, India has risen to the 5th position in global GDP rankings from 11th over the past decade, showcasing impressive economic progress. This advancement comes amid ongoing formalization of the economy, increased mainstreaming of businesses and enhanced infrastructure investments. With per capita GDP still trailing behind China and the USA, India’s economic potential remains substantial. At ITI Asset Management, we recognize these growth opportunities and hence feel that at the current valuations, large cap and mid cap companies would weather the market volatility better. Hence, a large and mid-cap fund becomes a prudent investment choice. ITI Large and Mid-Cap Fund offers a robust investment option by combining large and mid-cap stocks, aiming to capture long-term growth in India's evolving market.
Can you take us through your fund management strategy of this fund?
- Consideration to benchmark- sector and stock weightages. Guided by internal guidelines.
- Driven by regulatory requirement (min. 70% in large & mid cap) of the scheme and investment conviction of businesses & current valuation.
- Discipline of managing within the given risk guidelines. Have an active sell management process. Have a list of macro calls on the sidelines.
- Blend between conviction with diversification. Blend between styles of growth & value.
Which sectors are you bullish on and why?
The themes we are bullish on are information technology, chemicals, infrastructure, indigenisation, formalisation, manufacturing, premiumisation and auto & auto ancillaries.
Why should MFDs recommend ITI Large & Mid Cap Fund to their clients?
While past records may not guarantee any future returns, while evaluating an investment option, one should look at the fund’s investing style, fund manager’s track record and how the fund fits in investors’ overall asset allocation mix. ITI Large & Mid cap Fund through its active portfolio management approach endeavors to create a durable portfolio for a long-term holding which aims for wealth creation over market cycles. The fund due to its differentiated portfolio creation process of identifying relatively stable companies, agile companies and emerging themes could be a good option to be considered in the core portfolio for investors.
ITI Large & Mid Cap Fund
(An open-ended equity scheme investing in both large cap and mid cap stocks)
NFO Opens on 21 August 2024 and closes on 04 September 2024.
Offer for Units of Rs. 10 each for cash during the New Fund Offer and Continuous offer for Units at NAV based prices..
Mutual Fund investments are subject to market risks, read all scheme related documents carefully
